Page 18 - BNE_magazine_06_2020 Growers

18 I Companies & Markets bne June 2020
Moldova considers issuing first Eurobonds since 1997
Iulian Ernst in Bucharest
The Moldovan government is examining the option of issuing Eurobonds this year to finance infrastructure projects, a government statement said on May 13. Money raised would be used for road construction and rehabilitation, construction of aqueducts and sewerage, investments in irrigation stations, and public transport, Mold-Street.com reported.
This comes in the context of the Constitutional Court having rejected, for reasons not yet explained, the law on the ratification of a €200mn loan from Russia, part of a bigger €500mn financing agreement aimed at investments in infrastructure.
The idea of issuing Eurobonds was for the first time voiced by the newly established government of Prime Minister Ion Chicu at the end of last year. At that time it was announced that the government is considering "the solution of tapping the international financial market with a seven-year Eurobond as of 2021, in a total amount of $500mn”.
During a meeting convened by Chicu this May, officials examined the necessary steps and the national legal framework governing each of the stages involved in a Eurobond issue.
The Ministry of Finance is already discussing the issue with rating agencies. The paths followed in the placement of Eurobonds by Armenia and Serbia were examined and the
solutions identified by these states in contracting consulting companies and project preparation were noted. Serbia’s finance ministry said on May 11 the country raised €2bn from a seven-year Eurobond issue, which will be listed on the London Stock Exchange.
Chicu ordered that information on projects of national importance be collected from all central authorities, that their value and priority be examined and evaluated. The set of projects will be discussed with national experts in the field to determine prioritisation. This should, in principle, determine the size of the issue.
“The objective of issuing the Eurobond is to modernise and industrialise the country. We need resources to boost the process of raising the standard of living and to create stable and well-paid jobs in the country's districts,”
said Chicu.
Chisinau’s last Eurobond issue was back in 1997. In 2002 it restructured the $40mn bond over another seven years.
However, last April, Trans-Oil Group, a major trader and processor of oilseeds in Moldova and the main operator of the country's sole port Giurgulesti, issued a $300mn bond but it had to accept 12% yield. The bond was issued by Cyprus registered Aragvi Holding International, the vehicle that owns the holding.
Serbia raises €2bn from 7-year Eurobond
Denitsa Koseva in Sofia
Serbia has raised €2bn from a seven-year Eurobond issue, which will be listed on the London Stock Exchange, the finance ministry said in a statement on May 11.
The government has adopted a €5.1bn package to support the economy amid the coronavirus (COVID-19)-related crisis and has refused to borrow from the International Monetary Fund and the EU. The funds from the Eurobond issue will be used to finance the stimulus measures.
“Serbia is the sole European country that went out on international markets during the time of the COVID-19 pandemic without the help of the European Central Bank in the sale of the bond,” the ministry said in the statement.
www.bne.eu
The securities carry a 3.125% coupon. More than 300 investors bid for the bonds, placing offers for €7bn. Thanks to the high investor interest, Serbia was able to lower the cost of borrowing by 0.5pp.
“Investors have shown that Serbia reacted well in the time of the coronavirus pandemic and took the respective economic measures that would help the economy to overcome this period and resume the economic growth,” the finance ministry said in the statement.
Raiffeisen analysts said in a note that the high volume of bids "demonstrated healthy demand for Serbia risk in crisis time".