ArmInfo. The Armenian Government is planning another issue of Eurobonds before 2020. Deputy Finance Minister of Armenia Atom Janjughazyan told ArmInfo that the next issue of Eurobonds is aimed at successful management of the country's state debt.
Armenia launched its debut issue of bonds in Sept 19, 2013. The volume of the issue was $700mln, the yield of the bonds - 6.25%, the maturity - 7 years. The key underwriters of the first Armenian Eurobonds were Deutsche Bank AG (London Branch), HSBC Bank plc. and J.P.Morgan Securities plc. According to the Finance Ministry, following the issue of the bonds, the demand for them exceeded the issue amount for several times and totaled $3 bln. From September 2013 till late January 2014, the yield of the Armenian Eurobonds dropped from 6.25% to 5.85-5.8% and amounted to nearly $56 mln.
The second issue of sovereign bonds in the amount of $500 mln, 10-year maturity and 7.5% yield took place on 19 March 2015. The proceeds from the second issue of Eurobonds totaled $487 mln. Part of the amount received from the sale of these bonds ($205 mln) was spent on the buyout of the first issue of the bonds. The remaining part was transferred to the treasury account of Armenia and to the budget system of the country. Experts said that this proved to be the most expensive foreign debt the Government had ever attracted.
Meanwhile, Atom Janjughazyan said that the second issue of Eurobonds proved to be successful. The deputy minister is convinced that if the country failed to buy out $200 mln of the debt in 2015, the state debt serving in 2020 would not cost $921 mln, but much more, which "would become a real horror for the budget". The expert stressed the need to choose the right moment for the next issue of Eurobonds. If at the moment of the issue the debt-to-GDP ratio is 90%, the yield will be under threat; and quite the opposite - if positive macroeconomic indices are ensured, the debt will be serviced at a low interest rate.
To note, by the Armenian Central Bank's data, in 2015 the transactions with Armenian Eurobonds on the secondary market amounted to 110.36 mln USD, with the average yield being 6.46%. In early 2015, the Armenian bonds mainly appreciated and the yield ranged within 6-6.4%, whereas in late 2015 the bonds depreciated to 7%. In early 2016, amid the USD growth in the republic, depreciation remained at 7%. However, by March 2016, amid appreciation of the national currency, the Eurobonds started growing in price and the average yield made up 6.44%. On April 5, Bloomberg reported that the price of the Armenian Eurobonds (with the maturity till 2020) dropped right after the outbreak of military actions (Azerbaijan's aggression in April -editor's note), and the yield grew by 16 pct points to 6.52%. Since early 2016, the yield of both Eurobonds and AMD government bonds of Armenia has declined regardless of the April events.
