Yesterday, Ministry of Finance successfully issued the Eurobond on the international capital market in the amount of EUR 175 million. Maturity period of the Eurobond is 3.5 years, i.e. January 2013. Coupon interest rate offered was 9.875%. This is the second Eurobond the Republic of Macedonia issues.

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Issuance of the Eurobond was in a turbulent period in which many countries in SEE, having even better investment rating that the credit rating of our country, feared the outcome of such appearance on the international capital market. It has to be underlined that this is the first issue of Eurobonds in a country that has no investment rating since the crisis emerged. For comparison purposes, Lithuania, which is a country having investment rating and an EU Member State, issued Eurobond in the amount of EUR 500 million on 22 June 2009, with an interest rate of 9.375%, which is not significantly less compared to the rate of the Eurobond of the Republic of Macedonia.

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While the crisis was in full swing, the existing Eurobond of the Republic of Macedonia, issued in 2005, was traded longer period with a spread above the mid-term swap and over 1000 basic points, which would mean that the expected yield reached up to 14% on annual basis. Therefore, one can conclude that for a short period of time, actively contacting the investors and presenting the developments and the perspectives of Macedonia, we managed to achieve lower yield by more than 4%.

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Interest for the Eurobond at the foreign investors was significant. Credit rating agencies Standard & Poor’s and Fitch rated this security with BB and BB+ respectively. What speaks in favour of the great interest for purchasing this Eurobond is the fact that the demand was larger than the offered amount defined in the prospectus for issuance of EUR 48.6 million, while the investment base is geographically dispersed on the European continent and wider, comprised by investors from Great Britain (59.9%), Switzerland (11.3), Brazil (8.6%), Austria (6.9%), Denmark (5.1%), Germany (3.1%), Greece (2.9%), Benelux (1.5%), and other countries (0.7%). Main buyers are asset management companies (35.8%), pension funds (22.9%), investment funds (18.6%), private banks (10.8%), banks (7.6%), insurance funds (3.4%) and other (0.9%).

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At the moment, when all countries strive for attracting foreign direct investments and capital entry, the Republic of Macedonia managed to attract broad range of investors who perceive the country as an attractive (safe) destination to invest, being an advantage for each country in 2009.

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At the moment, total public debt of the Republic of Macedonia amounts to EUR 1721.9 million, i.e. 25.9% in relation to GDP, and this activity will lead to slight increase of the public debt by 2.6 p.p., which is in line with the 2009-2011 Public Debt Management Strategy of the Republic of Macedonia.

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