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Capital Markets

Albania: Tirana secures a sovereign rating

Albania has finally secured a credit rating in a move that the authorities in Tirana hope will help boost the Balkan republic’s investment profile with international investors. Moody’s Investors Service assigned a Ba1 country ceiling for foreign-currency bonds and a B1 issuer rating to the government. Moody’s also awarded a B2 foreign-currency bank deposit ceiling along with a local-currency country ceiling of A3 and a local-currency bank deposit ceiling of Baa1. All ratings carry a stable outlook.

"The macroeconomy suffers from a weak export performance, a shortage of energy, poorly defined and enforced property rights, including an absence of a comprehensive land title registry, a court system that is sub-optimal, and a generally cumbersome business environment," says Jonathan Schiffer, senior credit officer in Moody’s sovereign risk unit. However, he adds: "With the exception of the trade performance, all these weaknesses are being addressed by government and multilateral projects."

James Oates, senior adviser at UniCredit Markets & Investment Banking in London, believes that although the economic climate is still challenging, it is changing for the better. "By and large things are improving in Albania," he says. "But it’s still very much a tale of two economies – on the one hand the public sector is still very slow and inefficient, on the other, the private sector is extremely dynamic and efficient and is beginning to attract significant amounts of inward investment."

On the political front, Moody’s notes that Albania benefits greatly from a political class that is pro-business and that there are no big differences between political parties on economic or foreign policy, as all participants tend to be in favour of EU and Nato membership, and strongly supportive of the cautious economic policy recommendations received from the IMF, the US Treasury and the World Bank.

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