Thursday, July 4 2013 17:11
Armenia can take advantage of favorable situation to enter international bond market
ArmInfo. Armenia can take advantage of the favorable situation to introduce its sovereign securities in the international bond market, Gari Muradyan, investment consultant at "Capital Investments" cjsc, told ArmInfo's correspondent.
To recall, the Government of Armenia has recently taken a conceptual decision on issue and placement of sovereign bonds in the international capital markets and preliminarily fixed the first tranche at 500 mln USD. The expert thinks that the general situation for the sovereign issuers from developing countries is good today, because the global interest rates are rather low and the yield of the securities of the developing countries' issuers are quite attractive for the investors. "In this context, if Armenia is going to introduce its sovereign securities in the international market, the right time is chosen. It will even be able to fix somewhat lower interest rates, because Armenia's sovereign ratings are higher than those of Ukraine and Georgia", he said. Muradyan pointed out that in 2011 Georgia issued 10-year Eurobonds worth 500 mln USD at 7.125% p.a. Last year Ukraine entered the markets with 10-year securities worth 1.25 bln USD at the interest rate of 7.8%.
When asked how the international financial organizations' negative forecasts about the economic growth rates in Armenia may affect the success of placement of the Armenian securities, the specialist stressed that at any rate the international rating agencies have defined a good investment level for Armenia. In case of favorable conditions of global markets, this will help the country to attract quite inexpensive resources from these markets and the interest rates may range from 7% to 8%. The expert believes that in the most unfavorable climate, the interest rates of the Armenian 10-year securities worth $500 mln will be no higher than 8.5% p.a. As regards the rates in a favorable climate, they will be about 7%. However, given the fact that the US Central Bank is already going to stop or at least slow down its program of bond retirement, the prevailing yield of long-term bonds may be much higher in 2014, when Armenia intends to issue Eurobonds.
Muradyan thinks the most favorable stock market for the Armenian sovereign bonds is the London Stock Exchange (LSE), though some CIS countries chose stock markets in Frankfurt and Berlin. Much will depend on the underwriter of securities, on its image in the international markets and skills to place new securities in the markets.
The expert believes that the introduction of Armenian Eurobonds will become an important event for the future corporate issuers and will be a benchmark for foreign investors specializing in investments in securities of the companies from the Emerging Markets. Muradyan thinks that the interest rates in the global markets will sooner or later start steadily growing. "In that case it will be hard for us to attract inexpensive resources from abroad. Even nowadays most analysts think that the market is glutted with these securities, and the U.S. economy starts recovering. Therefore, one should hurry to enter the global markets", he said.
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