Montenegro's 750 million euro bond sale helped fend off debt crisis -finance minister

Montenegro's 750 million euro bond sale this week has helped the country avert a debt crisis, with proceeds earmarked for refinancing debt as well as new investments, senior government officials said on Thursday.

Montenegro's 750 million euro bond sale this week has helped the country avert a debt crisis, with proceeds earmarked for refinancing debt as well as new investments, senior government officials said on Thursday. It sold the Eurobond, which matures in 2027 and carries a 2.785% coupon, less than a week after a new coalition government under Prime Minister Zdravko Krivokapic took power.

The country of just 620,000 people relies heavily on tourism along its Adriatic Sea coast and its economy has been reeling from the impact of the coronavirus pandemic. The World Bank forecasts a 12.4% contraction this year after worst tourist season on record. "Montenegro has averted bankruptcy," Finance Minister Milojko Spajic said. "We had to react before the beginning of next year so we would not plunge into a debt crisis."

Krivokapic told the same news conference in Podgorica that some of the funds would be used to cover debt inherited from the previous government led by the Democratic Party of Socialists, loyal to long-serving President Milo Djukanovic. The money raised will also be used for the budget and investments. Krivokapic said the government had opted to issue a Eurobond rather than sell state property or take out commercial loans: "We had one of best offers, and we did that."

Montenegro, which is a NATO member and a European Union membership candidate, has public debt of around 3.66 billion euros or 80% of GDP.