March 7 (SeeNews) - Montenegro has successfully placed its maiden US dollar-denominated bond issue worth $750 million (690 million euro) on the international market, with a seven-year maturity and a 5.88% interest rate, the finance ministry said.
"The borrowing is necessary predominantly for settling old debts that are due to be repaid this year and next," finance minister Novica Vukovic said in a statement on Wednesday, after the bond sale.
Parallel with selling the bond issue, the government also signed a hedging arrangement as a cross-currency swap to protect itself from currency risks. Thus, the dollar borrowing resulted in 35 million euro savings as compared to a direct borrowing in euro, Vukovic explained.
More than 200 global investors showed interest in the issue, with demand totalling $4.7 billion - more than six times the amount on offer, as per the statement.
Montenegro has so far placed three euro-denominated bonds on the international market, and its first offer of US dollar-denominated bonds allowed the entry of new investors in its pool of government securities.
Under the 2024 budget, the government is allowed to issue new debt of up to 1.15 billion euro this year for refinancing old debt, financing capital expenses and providing fiscal reserves for next year, the finance ministry said.
According to a finance ministry projection, Montenegro will need to pay an overall 656.7 million euro to settle its debt due in 2024, of which 518.63 million euro in principal and 138.07 million in interest.
($ = 0.920 euro)