Tuesday, September 18 2012 22:07
Issue of foreign exchange bonds in Armenia will not accelerate dollarization rates
ArmInfo. Issue of foreign exchange bonds in Armenia will not accelerate dollarization rates, Armenak Darbinyan, a member of the Armenian Central Bank Board told media, Tuesday, in response to ArmInfo's question. He said that the decision to issue foreign exchange bonds aims to boost the securities market, first of all.
"I don't think that the given decision will lead to acceleration of dollarization rates, because this indicator is comparatively high today," Darbinyan said.
He hopes that the economic agents in Armenia will welcome the given decision and start issuing corporate foreign exchange bonds.
ArmInfo analysts say that the idea of creating foreign exchange bonds trading floor and the decision to
issue foreign exchange bonds is connected, first of all, with stagnation of the national currency bonds trading floor following the financial crisis and sharp devaluation of the national dram in March 2009. As a result, the number of new issues in the equity market slumped. Due to the growing interest rates on alternative instruments, corporate bonds have become less attractive and nearly all the new issues pursued a goal of refinancing the previous ones. Bonds of only to emitters are currently listed on the Armenian stock exchange.
The financial circles in Armenia actively study issue of foreign exchange bonds over the last post-crisis years. The idea has both supporters and criticizers in the financial market. The supporters think that the given decision will resume inflow of foreign capital in Armenia and became an impetus for investments in foreign exchange bonds by foreign investors. Others think that the given decision will create serious currency risks for local emitters. In this context, the list of the companies that intend to issue foreign exchange bonds should be restricted, experts say. In particular, exporter-companies and representatives of the financial sector should be included in the given list.
Experts say that issue of foreign exchange bonds may increase dollarization rates in the country's economy, which are already relatively high today. Experts say the government may become the first emitter of foreign exchange bonds (eurobonds) issuing the first testing tranche in the amount of $200-$500 million. Foreign exchange bonds can be very attractive as a debt instrument also for a number of big companies having their history in the Armenian equity market.
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