12th January 2018, Skopje – Macedonia successfully issued Eurobond with historically the lowest interest rate ever of 2.75%. Investors showed huge interest. They were willing to invest more than EUR 3.5 billion. This is the most solid proof that foreign investors believe in the outlook of the Macedonian economy and the long-term stability of the country.

Just for comparison purposes, previous five Eurobonds were issued at significantly higher interest rates, ranging from 3.975% to 9.875%, i.e. their weighted average interest rate was 5.34%. Twice lower interest rate of 2.75% has provided for generating savings on the basis of interest in the amount of around EUR 90.6 million, which would not have been the case had the Eurobond been issued in the same amount and with the same maturity, but with higher average interest rate (of 5.34%).

Eurobond proceeds will be used primarily as budget deficit support. More precisely, the proceeds will, among other things, be used for salary increase and investments in education and health sectors, support to both domestic and foreign companies, increasing funds in the defense sector for the purpose of meeting the NATO standards, boosting capital investments, etc.

In addition, previously incurred debts will be also repaid with the Eurobond proceeds. First installment in the amount of EUR 95 million under the PBG loan, extended in 2013, will be repaid on 29th January.

We have benefited from the favourable conditions on the international market and have lowered part of the huge amount of debt which Macedonia would face in 2020. One third of the Eurobond, issued in 2015 in the amount of EUR 270 million and falling due in December 2020, was repaid early. The interest rate of 4.875% applied is significantly higher than the one of 2.75% of the newly issued Eurobond. Thus, we have reduced the debt amount falling due in 2020 and have ensured significantly lower re-financing risk. For the first time in history, Macedonia has early repaid part of the Eurobond, thus falling within the group of developed economies where such proactive public debt management policy is a standard procedure.

Considering that we are repaying almost EUR 200 million for previously incurred debt with this Eurobond, the net borrowing amounts to around EUR 300 million.

Finally, I would like to use this opportunity to thank the employees with the Ministry of Finance, as well as all other institutions, for putting great effort for months in this process. I would like to express special gratitude to the Governor of the NBRM with whom we have together presented the perspectives of the Macedonian economy to the foreign investors. The close associates at the Ministry of Finance have certainly played a significant role, who even sacrificed the Holidays to successfully launch the Eurobond transaction in the period we believed for the interest on the international market to be at its peak. Without them the result of historically the lowest interest rate ever would not have been possible to achieve, a result almost no one. neither in nor outside Macedonia, believed in previously.




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