The value of corporate bonds issued through private placement by Albanian companies reached the level of 7.5 billion ALL (around 62 milion Euro) at the end of last year. Based on data from the Albanian Financial Supervisory Authority (AFSA), the value of these instruments is about 0.3% of Gross Domestic Product. About 53% of the issued corporate bond value is nominated in lek, 38% nominated in euro and 3% nominated in US dollars.
Legally, corporate bonds issued by private placement can be offered to institutional investors and to a number of up to 100 individuals. Last year, the AFSA approved five prospectuses for private corporate bond issues for four issuers, including two banks and two microcredit institutions.
Meanwhile, in the first half of this year, AFSA has approved four other issuance prospectuses, for a total value of 11.5 million euros.
Since 2011, companies in Albania have successfully issued corporate bonds for more than 110 million euros. Until now, in the Albanian capital market, the issuance of corporate bonds has been done with a private placement, also due to the lack of a securities market. AFSA underlines that, due to their nature, private placement of corporate bonds do not create liquidity in the market.
But, from February 2019, the issuance and trading of the shares of private companies can be done in the Albanian Securities Exchange (ALSE). The public offering would make these instruments tradable and liquid, creating the possibility of selling them at any time or using them as financial collateral for borrowing.
The use of financial instruments to rise capital through listing to the stock exchange needs an initial incentivation and the experience of the countries of the region has shown that this incentive should come from the public sector.
Unfortunately, in Albania the government has not taken concrete initiatives to activate the capital market yet. However, in recent months the Ministry of Finance and Economy is studying the idea of lending to public companies through bond issuence and no longer exclusively through banking loans.