By Laura Cochrane
Jan. 18 (Bloomberg) -- Albania plans to sell its first international bonds to help repay bank loans, joining the busiest start to a year for emerging-market foreign-currency borrowing in a decade as borrowing costs plunge.
The Balkan country may offer 300 million euros ($431 million) of three- or five-year bonds and has started the process of hiring a bank to take the lead in managing the issue, the Ministry of Finance said today on its Web site.
The Philippines, Mexico, Poland, Turkey, Indonesia and Slovenia have sold more than $13 billion in overseas debt this year, the most by developing nations for the period since at least 1999, data compiled by Bloomberg show. Developing-nation borrowing costs dropped to a 19-month low last week, spurring deals, as recovery from the global recession stoked demand for higher-yielding assets.
“There is no way Albania would have been able to sell bonds 12 months or even six months ago,” said Nigel Rendell, an emerging-market strategist at RBC Capital Markets in London. “People are now more positive about the global outlook. Albania will probably sell debt at an attractive interest compared with the next-to-nothing you get on securities out of the U.S. and Europe at the moment.”
Albania received a three-year, 95 million-euro loan in May last year and has $225 million of outstanding restructured bonds due 2025, Bloomberg data show. The yield on the restructured bonds was at 6.046 percent on Jan. 15, according to Standard Bank Group Ltd. prices. That compares with an implied yield on U.S. Treasury 10-year futures contracts for March at 3.89 percent today.
Vietnam, Slovenia
Slovenia sold 1.5 billion euros of 10-year bonds today at a yield of 4.125 percent, or 89.3 basis points more than similar- maturity German government bonds, according to Bloomberg data.
Vietnam will start marketing its first international bond sale in four years on Jan. 18, said a person familiar with the matter. Romania may sell 1 billion euros in euro-denominated bonds in the first quarter of this year, and more later in 2010, Finance Minister Sebastian Vladescu said Jan. 12.
Angola and Belarus are among countries planning their first international sales. Governments from both countries said in November they were seeking to sell international debt. Kenya’s Prime Minister Raila Odinga said in December the country plans to sell its first Eurobonds.
Prepaying Loan
Albanian Prime Minister Sali Berisha said in January 2008 the country envisaged issuing its first foreign-currency bonds in May of that year, a sign its economy had shed the legacy of a half-century of communist-imposed isolation. Emerging-market borrowing costs jumped more than threefold from the time of his remark through October 2008, while sales of developing-economy debt plunged as the global economy fell into recession.
Almost 200 million euros of proceeds from the planned bond sale will be used to pre-pay a syndicated loan, the Ministry said. The country has an issuer credit rating of B1 from Moody’s Investors Service, four levels below investment grade, putting it on par with Belarus and Mongolia. It was granted the rating in June 2007.
Albania’s economy is forecast to grow 2.2 percent this year after 0.7 percent expansion in 2009, according to an October report from the International Monetary Fund. The country joined the North Atlantic Treaty Organization in April last year and is a potential candidate for European Union membership.
The country remains one of the poorest in Europe, hampered by a large informal economy and an inadequate energy and transportation infrastructure, according to the CIA Factbook.
Democracy
Albania, located in southeastern Europe on the Adriatic and Ionian seas, was trampled first by Mussolini, then by Hitler in World War II. Enver Hoxha, who led the revolt against the Nazis, turned the country into a Stalinist fiefdom, then broke with the Soviet Union and allied himself with China.
When the communist regime was swept away in 1991, Albania had none of the economic links with the West that smoothed the transition to democracy in more advanced republics in southeast Europe, such as Slovenia. (Bloomberg - Editors: John Kohut, Gavin Serkin.)
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