Macedonia Hires Banks for First Eurobond in More Than a Year

  • Citi, Deutsche Bank, Erste Group organzing investor meetings
  • Macedonia sold EU500 million in 2021 bonds last year

Macedonia plans to return to international capital markets for the first time in more than a year, the latest developing European nation to take advantage of declining borrowing costs amid signals the European Central Bank may expand its stimulus program.

The nation chose Citigroup Inc., Deutsche Bank AG and Erste Group to organize investor meetings in the U.S. and Europe starting Nov. 4, according to a person familiar with the plans who asked not to be identified because information is private. The sale would be the first since the country borrowed 500 million euros ($552 million) at 4.25 percent in July 2014. The yield on that bond due in 2021 has fallen 39 basis points from a high in July.

The former Yugoslav republic is poised to follow Romania, Poland and Lithuania which last month collectively sold 5.25 billion euros of bonds. Yields have declined as pressure mounts on the ECB to consider measures to aid growth, including an expansion of its bond-buying program or a cut in interest rates.

“The timing is great with a still dovish ECB,” said Christian Mejrup, a money manager at Global Evolution A/S, which oversees $2.5 billion in assets, in Kolding, Denmark. “The risk for Macedonia is that you have seen spreads widening in many periphery European countries like Spain and Portugal which indirectly could lead to investors requiring higher spreads on a new issue from Macedonia.”

Maturing Debt

The yield on the government’s 2021 debt rose one basis point on Monday to 4.72 percent. Macedonia, a candidate for European Union membership since 2005, has 150 million euros of 10-year bonds maturing in December and needs money to help cover external financing.

The government planned for 17.5 billion denars ($314 million) in external borrowing in its 2015 budget, excluding money raised through financial institutions such as the IMF, the European Bank for Reconstruction and Development and the European Investment Bank.

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