Albania to borrow 250 mln euros via Deutsche, Alpha

TIRANA, March 5 – Albania will borrow 250 million euros through Deutsche Bank and Greece’s Alpha Bank in a syndicated loan to fund its budget deficit, the Finance Ministry said on Thursday.

“The best offer was the one presented by Deutsche Bank and Alpha Bank. The Finance Ministry will give these banks the mandate to secure the requested financing,” the ministry said in a statement.

Albania received offers from seven international banks for the syndicated loan after it decided last year to scrap plans for a debut euro bond issue of 300 million euros because the market was unfavourable.

The ministry said it would recommend that the banks include “Raiffeisen Bank and Credit Suisse, which have made competing offers, in the financing.”

“The high interest of important international banks to take part in this financing is an expression of confidence in the Albanian economy,” the ministry added.

Albania received offers from J.P. Morgan, Citigroup , Deutsche Bank, BNP Paribas, Raiffeisen, Credit Suisse and Alpha Bank , Greece’s third-largest lender.

The International Monetary Fund sees economic growth in Albania, which holds elections on June 28, falling below its 3.7 percent forecast as foreign investment, exports and remittances by migrant workers fall this year because of the global economic slowdown.

To finance its 2008 deficit, Albania borrowed 230 million euros in a syndicated loan from Greece’s Alpha Bank and National Bank of Greece at Euribor plus 1.25 percent over 15 years with a grace period of five years.

The ministry did not reveal any figures about the cost of the 2009 loan. The money will be used to fund public infrastructure projects.

Albania will ask Deutsche Bank and Alpha Bank, who have offered to fund 60 percent of a syndicated loan of 250 to 300 million euros, to get Raiffeisen and Credit Suisse to provide the rest.

Albania wanted to borrow to realize its public investments programme ahead of its June 28 general elections and ward off the effects of the global financial and economic crisis. A total of seven international banks presented their offers.

“None of the banks offered the sum asked by the government. The Finance Ministry will give a mandate to Deutsche Bank and Alpha Bank to secure the 250-300 million euro as a syndicated loan,” Finance Minister Ridvan Bode told a news conference.

“They have offered around 60 percent of the sum. We’re heading towards a syndicated loan by several banks,” he added.

Bode added Albania would ask Deutsche and Alpha to “include Raiffeisen Bank and Credit Suisse in the transaction” after they offered the second and third best offers.

Along with the National Bank of Greece, Alpha Bank, Greece’s third largest lender, gave Albania 230 million euros to fund its 2008 deficit through a syndicated loan at Euribor plus 1.25 percent over 15 years with a grace period of five years.

Bode refused to reveal the price of the three-year loan.

“It is conspicuously much lower than the domestic market, but the figures are confidential. It is conspicuously much lower than the hard currency market,” Bode added.

Albania received offers from seven international banks for the syndicated loan after it decided last year to scrap plans for a debut euro bond issue of 300 million euros because the market was unfavourable.

Bode said Albania could re-finance the loan in a year’s time without any penalties should better interest rates and conditions in the financial markets.

“We hope that the international financial market gets stabilized so Albania can enter the Eurobond market through this sum, by paying ahead of time the credit received this year and by converting it in a Eurobond with more suitable interests and terms for our country,” Bode added.

The International Monetary Fund sees economic growth in Albania falling below its 3.7 percent forecast as foreign investment, exports and remittances by migrant workers fall this year because of the global economic slowdown.

“Albania is one of the rare countries of the world during the global financial crisis to be successful in securing such an credit from international banks,” Bode said.

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