The Republic of Macedonia took advantage of both the scarcity of debut sovereign issues and the European Commission’s assessment in November that it should be granted EU candidate status to attract big demand for its first Eurobond.
Investors from across Europe, the US and Asia put in bids totalling €593 million for the €150 million issue, with British investors taking the bulk of the deal at 33%, closely followed by German accounts at 31%.
The 10-year bond pays a coupon of 4.625%. “The coupon level is evidence that Macedonia has done most of the structural reforms and is moving steadily towards the EU and Nato,” says Nikola Popovski, Macedonia’s minister of finance.
Strategic move
According to Popovski, Macedonia’s decision to issue the Eurobond was “a strategic move, undertaken in order to conduct a buy-back of existing high-risk and expensive London Club debt.”
This, he says, will allow a high level of budget savings in the future, as well as avoiding interest and foreign-exchange rate risks and extending the maturity of its debt portfolio.
The Eurobond issue temporarily raises Macedonia’s external debt to GDP ratio from a relatively low ratio of 41% to 47%, until the proceeds are used to retire the London Club debt.