Placement of GLOBAL CREDIT bonds confirms forecast: demand exceeds supply

 

According to the source, the demand on the bonds exceeded the supply, while weighted average return was insignificantly lower than it was announced. Particularly, purchase orders with a total value of USD 

1,218,089 were placed for the Company's USD bonds. The Issuer has attracted USD 1,000,089.25 from placement. Cut-off price of the bonds was USD 100, weighted average yield amounted to 9.495% and the cut-off yield stood at 9.5%. Purchase orders with a total value of AMD 161,009,000 were placed for the Company's AMD bonds. The Issuer has attracted AMD 100,009,000 from placement. Cut-off price of the bonds was AMD 10,000, weighted average yield amounted to 14.9901% and the cut- off yield stood at 15%. The first tranche of bonds includes 10,000 coupon bonds (GLBLB1) with nominal value of USD 100, coupon rate of 9.5% and maturity period of 2 years. The second tranche of bonds includes 10,000 coupon bonds (GLBLB2) with nominal value of AMD 10,000, coupon rate of 15.0% and maturity period of 1 year.

 

The company will spend the funds from the issue and the placement on increasing the financial services, elaborating and introducing new loan products, as well as on expanding the company's geography (as of 1 July 2015, the company had only one branch - in Yerevan). 

 

To note, GLOBAL CREDIT is the first among the universal credit companies in Armenia to introduce its own corporate bonds in the market. Placement of the bonds was carried out by "RENESA" CJSC, 

which will act as a market-maker of bonds as well. Prior to the placement of the bonds of GLOBAL CREDIT UCO, Vaghinak Saroyan, CEO at Renesa Investment Company forecasted that the demand will exceed the supply. He explained his forecast t the yield of the securities exceeds the rates of similar deposits in the banks - 9.5% and 15% p.a. for the bonds of GLOBAL CREDIT versus 7.4% and 13.4% for USD and AMD deposits (CBA's data as of 1 Oct 2015). "In addition, when comparing with the similar bonds on the stock exchange, for instance, with the two USD issues of Araratbank, we also see a difference - 7.25%-8.5% versus 9.5% for USD bonds of GLOBAL CREDIT UCO. One should also pay attention to the Armenian Eurobonds, whose latest issue had a 7% yield," says Saroyan, noting that in practice it is easier to diversify the bonds - their portfolio has higher liquidity as compared to the deposits and it is also easier to control that portfolio. 

 

To note, GLOBAL CREDIT UCO CJSC is a universal credit organization registered according to Resolution No. 267A as of 26.10.2010 of the Central Bank of Armenia, established in consequence of amalgamation of WASHINGTON CAPITAL universal credit organization CJSC and CREDIT UNION universal credit organization CJSC, which also was enlarged as a result of "GLOBAL CREDIT" UCO CJSC and "GFC GENERAL FINANCIAL and CREDIT COMPANY UCO LLC union.  Now the company is the  legal consequent of "Credit Union", "Washington Capital" UCO CJSC and "GFC General Financial and Credit Company" UCO LLC. 

 

To recall, Renesa Investment Company was founded in March 2001 and was registered in April 2001.  Since January 2002, Renesa has been a member of the Armenian Stock Exchange, which was later renamed into NASDAQ OMX Armenia. Since December 2008, Renesa has been a member of 

the securities registration system. The shareholders of the company are Eduard Marutyan (50%) and Araik Karapetyan (50%). In 2014, Renesa was declared as the best investment company in Armenia. Renesa has repeatedly been the underwriter and marketmaker of the Armenian issuers' bonds.