(Bloomberg) -- Albania has prepared a loan from Deutsche Bank to manage liquidity and service its maturing debt this year if rising yields ruin its plan to sell a new Eurobond in the next few months, Deputy Finance Minister Erjon Luci said.
Premier Edi Rama’s cabinet wants to raise 300 million euros ($340 million) on international markets and may increase the amount to 500 million euros if there’s good demand, Luci said in an interview during a Euromoney conference in Bucharest on Thursday.
“We’re keeping our options safe,” Luci said. “We are finalizing another loan with Deutsche Bank with the guarantee of the World Bank of 250 million euros, which is sufficient for managing the liquidity situation this year, including the repayment of Eurobond, in case the yields and everything else changes.”
The country of more than 2.8 million people is working to join the European Union, and Rama’s government needs to bolster economic growth, consolidate public finances and reduce public debt levels to 60 percent of gross domestic product by 2019 under its program with the International Monetary Fund.
Deutsche Bank AG and JP Morgan Chase & Co. have been selected as lead managers to prepare the sale the international bond, as a previous five-year Eurobond is maturing in November. If the government raises 500 million euros, it will use 200 million euros to repay some of its public debt, Luci said.
The yield on Albania’s Eurobond maturing in November rose 34 basis points to 3.292 percent by 12:25 pm in Tirana, its highest level since Feb. 11, according to data compiled by Bloomberg. Its currency, the lek, traded 0.1 percent weaker at 140.87 per euro.
Luci sees Albania “able to go to the market hopefully before August, but if needed, maybe later.” The government is open to selling the bond after August “but without putting us into difficulty of having to sell at any cost,” he said.
--With assistance from Gordana Filipovic in Belgrade.
To contact the reporters on this story: Irina Vilcu in Bucharest at isavu@bloomberg.net; Andra Timu in Bucharest at atimu@bloomberg.net To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net Michael Winfrey, Balazs Penz