Category: News from Issuers

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The Ministry of Finance has begun the implementation of pilot project for the development of the secondary market of bonds. The project has brought a new form of trading of 5-year bonds. Only five banks, selected as ‘market makers’ or market developers, participate in competitive auctions.

Subsequently, these bonds are traded by developing banks through an electronic platform. Interested investors can buy bonds through market developers. Each day, the Ministry of Finance and the Bank of Albania publish the fixed yield of trading these bonds. Currently, this yield is 4.55%, while the bond issue bond has been 5.3%.

This enables you to have a genuine market price for these instruments. This price directs investors for future auctions by the Ministry of Finance. The mechanism aims to develop the secondary market, making the bonds more liquid instruments and at the same time to set fairer prices for public debt securities. The existence of a reference rate of government bonds will also orient the debt instruments of a private future.

Corporate bonds are being issued for years, but with private bidding, while stock market opening has increased expectations for their public offering, but above all for their trading after the issue. Initially, 5-year bond auctions will be held every month, and the frequency will be less frequent. In the long run, the objective is to extend this form of trade to other government debt instruments.

Eurobond issued by the Albanian government in international markets were purchased by well-known international groups such as JP Morgan, Goldman Sachs, Aberdeen or the pension funds of Finland and France.

At the press release, Minister of Finance, Arben Ahmetaj said that this is evidence that these well-known companies or European pension funds have confidence in the Albanian economy while investing in the Eurobond of Albania.

While considering the success of the Eurobond issue and the low level of interest, the minister said that this issue will have positive effects also on the domestic market, through liquidity resulting in lower interest rates, treasury bills and potentially of credit. According to Ahmetaj, the saving from this movement is potentially ALL 10 billion.

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The World Bank estimates the successful issuance of the Eurobond by the Albanian government. Hilda Shijaku, head of the World Bank’s office in Tirana,said financial markets are showing a growing confidence in the Albanian economy.

According to Shijaku, this issue was consistent with the debt management strategy, through providing lower interest rates, with a longer term maturity. At the third stage in international financial markets, Albania successfully launched Eurobond worth EUR 500 million.

The maturity of issued Eurobond reached 7 years, from five years on previous issues, while the coupon was 3.55% in a significant decline compared to the previous two issues.

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According to data published by the bank itself, the total assets at the end of June reached the value of ALL 185 billion or nearly 1.5 billion euros.

Credins is consolidating its position as the third largest bank in Albania and has expanded assets by ALL 17 billion compared to the same period a year ago. However, in the first half of this year, portfolio growth has been slow, same as for the entire banking system.

Credins Bank’s loan portfolio continues to be dominated by business, construction and other services.

During this year, the growth of Credins assets was mainly based on risk-free assets, especially in securities. The portfolio of bank securities has reached about ALL 30 billion, up 67% compared to the previous year.

On the other hand, Credins is getting better positioned in the deposit market.

The total value of customer deposits reached ALL 154 billion, an annual growth of 7%. The bank’s financial result was positive for the first semester. The net profit was ALL 21 million.

The Electricity Distribution Operator will be listed on the Albanian Stock Exchange, enabling citizens to become part of the company through the purchase of shares.The plan was made known by Prime Minister Edi Rama during the presentation of the new Energy Strategy 2018-2030.

“For the energy market, we undertook a courageous process of liberalization and where we predict that in the space of a few years we have a 100% market opening of energy,” PM Rama said.“Today, thanks to this process, we have begun preparations for another very important step I believe will create a new atmosphere in the relationship between consumers and the energy distribution company, and will lead to another degree the organization of the company, transparency of the company’s work and its efficiency.”

“We have started work for an IPO and we hope that by the end of this year we will be ready to offer Albanian citizens the opportunity to participate as shareholders in the energy distribution company, with the ambition that next year the company will become a company where the massive participation of citizens as shareholders will have a mutual benefit for the company and the citizens, who can be included as the company’s shareholders as contributors and as beneficiaries. This could not be imagined just a few years ago. While today, this is not only possible, but we strongly believe that it is also necessary to bring the company to a new stage.”

“We are very convinced that market liberalization will bring tremendous improvements in every aspect of energy sector activity.”

According to the Minister of Infrastructure and Energy Damian Gjiknuri, 2.7 billion Euros will be invested over the next 12 years.Meanwhile, according to the USAID representative, the Albanian government should be cautious in providing concessions for the construction of hydropower plants.

The trading of government securities during the first days since the Albanian Securities Exchange was made functional has reached about ALL 650 million or EUR 5 million.

According to the statistics published by the Albanian Securities Exchange, ALSE, trading in its early days has reported a satisfactory volume, although the number of transactions is still limited.In seven transactions registered on the ALSE, five of them involved treasury bills and the two other government bonds.In total, about 85% of the traded amount was in treasury bills and 15% in government bonds.

ALSE began trading securities on February 22, after being licensed by the Financial Supervisory Authority July last year.The terms of the license stipulate that in the first year of its activity the Albanian Securities Exchange may trade securities issued by the Albanian government.ALSE aims to create a first-time genuine equity market in Albania, while market potentials are on the rise.Meanwhile, several big companies have already started issuing their debt securities.

ALSE paves the way for issuing these bonds with a public offering and, above all, it will enable their ongoing trading after being issued, thus turning them into a liquid financial instrument.

February 22 marked the launch of the first operating securities market in Albania.The Albanian Securities Exchange ALSE, officially started its activity on Thursday.

Initially, trading has started with Albanian Government bonds and treasury bills, as is foreseen in the license issued by the Albanian Financial Supervisory Authority (AFSA).Stakeholders interested in trading government securities before the maturity date may submit their demands and offers on the electronic trading platform at ALSE, through banks or brokerage firms that are affiliated to this market.

Since July last year, the Albanian Securities Exchange is the only securities market licensed by the AFSA.After the first year of its activity, the Securities Exchange will also be open to trading securities of private companies.

Potentials for the development of the securities market are on the rise, given that some private companies are using bonds as a borrowing instrument.

In its latest report on Albania, the International Monetary Fund notes that “a key factor in financial deepening would be a secondary liquid market for government securities.”

In this way, IMF joins other international financial institutions such as the EBRD, which previously noted that Albania and the whole Western Balkans region would have great benefits if the financing of the economy were more balanced between bank lending and capital markets.

According to EBRD studies, the financing of investments through the capital market brings significant growth to employment, labor productivity and profitability of enterprises.

Meanwhile, the IMF also notes that “the development of capital market institutions requires high standards in the area of transparency and internal direction.”This finding comes shortly after the first private securities exchange, ALSE, was licensed in Albania.
In this way, Albania is getting ready to have a capital market that will provide the public with an important alternative channel to invest and secure funding.

ALSE comes as a project initially supported by Credins Bank, and later were included two other important financial institutions, the American Investment Bank and AK Invest.In the first year of its activity, ALSE will focus on trading of Albanian government securities.The licensing of the first private securities exchange represents a historic step for Albania’s financial market.

The existence of a stock exchange is essential for a more efficient use of funding sources in the economy.
In the view of the Albanian Financial Supervisory Authority (AFSA), the creation of a securities exchange is a concrete and clear indication of the maturity level reached by the Albanian financial market.In its official announcement, the AFSAunderlined that the securities exchange will enable profit-making companies to have an opportunity to grow, by selling their shares to a large number of shareholders and diversifying them.

In a longer-term perspective, the stock exchange will be a good opportunity to attract companies from other speaking areas, such as the Kosovo market, also serving as a platform for all Albanian investors.
Specialized financial institutions have insisted in the last years on the necessity of building a functional stock market.