Albania’s € 500 mln new loan officially confirmed

Albania has officially announced a request in international markets for 500 million EUR of debt through the issue of a 5-year bond.

The auction will be held next week and the money will be used for budget spending and for replacing past debts with high interest rates.

Specialized financial agencies predict that the operation will be successful and Albania will receive a loan with favourable interest rates.

The two reasons that led the Albanian government to this decision are 1) fulfilling the funding needs of the current budget and 2) reducing the cost of the existing debt.

In 2015, Albania borrowed 475 million EUR through a 5-year Eurobond, with a 5.75% interest rate. This needs to be paid by 2020. But the Ministry of Finances expects the new interest rates to be lower. This is why they have decided that some of the money will be used to pay the 200 million EUR of the Eurobond received in 2015. The financial operation replaces a more expensive debt with a cheaper one, lowering the interest rates for the budget and citizens.

This move was supported by prestigious international financing agencies, such as Bloomberg, which says that the demand of investors for Albania’s Eurobond is expected to be high, first of all, due to the low interest rate in the international market, also also due to the financial stability of the country, where the public debt has been dropping in the past years to 65% of the GDP.

The positive expectancies are confirmed by figures as well. This means that foreign investors perceive less security for the Albanian economy and are ready to issue debts with lower interest rates./Top Channel/