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27th September 2022, Skopje – Government adopted Decision, pertaining to the issuance of registered notes on the German market, known as Namensschuldverschreibungen, i.e. NSV, amounting to EUR 250 million. Funds will be used for repaying prior debts falling due, as well as for financing the budget needs. Ministry of Finance has continuously monitoring the capital markets, and as per the comprehensive analyses, this instrument, given the interest rate, as well as the maturity deadline thereof, appears the best option for the public debt portfolio. In fact, the interest rate shall account for 3.7% plus 6-month EUIROBOR, with 3-year repayment period and 18-month grace period.

NSV is a debt instrument typically issued by reputable clients with a solid investment credit rating, with the notes being purchased by German investors. NSV, as registered notes, have been so far issued in the Republic of Poland, Ireland, Belgium, and the Kingdom of Spain. This instrument is also issued by KFW, IBRD and EIB.

During the past period, several transactions were concluded on the international capital market by the EU Member States, having higher credit ratings than ours, with the interest rates ranging around 7%, with higher disbursed amounts. This is a result of the toughened terms and conditions on the international capital market due to the tightening of the monetary policy via increased interest rates by almost all major central banks worldwide, arising from the rising inflation.

Starting from the first quarter this year until now, a significant increase in the yields on the secondary market of the issued Eurobonds has also been observed, being a kind of benchmark when setting the price (the coupon) in case of potential issuance of a new Eurobond. At present, Macedonian Eurobonds are traded with a yield ranging around 7%, meaning that in case Republic of North Macedonia issued new Eurobond, the interest rate would have accounted for around 8%.

Amidst such terms and conditions, the need to pursue prudent domestic policies is even more evident, due to which Ministry of Finance found another more favourable source of financing. In the past period, Ministry of Finance worked, in cooperation with Deutsche Bank, on issuing new financial instrument, being German law governed registered Notes – NSV. As for this instrument, the interest rate is significantly lower than the one, which would have been achieved in case of a potential issuance of new Eurobond.

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