Official/ Albania issues 650 million euro Eurobond with 10-year maturity

2025-02-14 16:55:00, Ekonomi CNA

On February 11, 2025, the Republic of Albania entered the capital markets for the 7th time, successfully issuing a Eurobond worth 650 million euros.

This Eurobond was issued with a coupon of 4.75% and an interest rate (yield) of 5%. The instrument has a term of 10 years and will mature in February 2035.

This is the most successful issue of the Republic of Albania, since the first issue in 2010.

The success of this issue refers to several important aspects and primarily to the very high demand of investors, enabling a significant reduction in the interest rate (yield) during trading by 50 basis points, from the initial rate of 5.5%.

For our country, the lower margin can be specifically assessed than in any previous Eurobond issuance, which constitutes an important element of the interest rate, or as it is called in the terminology of financial markets, the "spread".

The highly successful 2025 Eurobond issuance transaction highlights several key achievements of the Republic of Albania's exit from the capital markets, which are:

The coverage ratio is among the highest achieved, at 4.3 times and the highest among the Central and Eastern European countries' issues, as of October 2024;
The lowest spread, compared to all bonds issued by the Republic of Albania;
Significant difference in the final margin of 50 basis points, compared to the moment of the transaction announcement (at 5% from 5.5%). On average, since 2019, this indicator for 10-year bond issues for Central and Eastern European countries is 25-35 basis points;
Wide geographical distribution and diversification of investors. The maximum number of investors who showed interest reached 195, being considered as the issue that had the highest attraction of foreign investors.
Compared to the Central and Eastern European issues, the issue of the Republic of Albania was made possible with very favorable financial conditions, although with a more moderate assessment by international agencies, compared to countries such as Serbia and Romania.
The Ministry of Finance estimates that the Eurobond issue has a special importance, not only for ensuring liquidity, but also because it ensures the presence of our country in international capital markets and measures the confidence of investors in the bonds issued by the Albanian state. This implies the long-term credibility of the Albanian economy as a whole and public finances in particular.

The main factors driving increased investor demand, lower interest rates, and more specifically lower margins are:

– Increasing the credit rating of the Republic of Albania, as a stable economy, thus reflecting the improved level of macroeconomic indicators, the prudent management of public finances, the proper management of state debt, as well as reconfirming the stable economic growth over recent years.

– Positive assessments by international reference institutions, such as the IMF, the European Commission, etc.

– Progress in the European integration process, which has increased investor confidence in Albania's long-term stability.

During the presentations, the Ministry of Finance held virtual meetings with 60 international investors, whose active participation once again confirmed the strong interest and increased confidence in the government's reforms, as well as its objectives towards fiscal consolidation.

The Ministry of Finance considers that the successful entry into international capital markets is a positive signal regarding Albania's credentials. We will continue to remain committed to a medium-term debt management oriented towards reducing risks and lowering costs. /Monitor