Tuesday, January 9 2018 13:56
Karine Melikyan

Fitch improved outlook on Yerevan`s rating from "Stable" to "Positive"

Fitch improved outlook on Yerevan`s rating from "Stable" to  "Positive"

ArmInfo. Fitch Ratings has  improved the outlook on the rating of the city of Yerevan from  "Stable" to "Positive", once again confirming the long-term issuer  default ratings ("IDR") in foreign and local currency at <B +> and  the Short-term IDR in foreign currency <B>. Rating drivers of  long-term IDRs and short-term foreign currency IDRs are not affected,  which is the reason for their confirmation. As reported on the Fitch  Ratings website, improvement of the forecast and confirmation of the  credit rating of Yerevan is dated December 22, 2017. For the first  time, Fitch Ratings assigned Yerevan a rating on December 2, 2016.

The Fitch report notes that following the results of 9 months of  2017, Yerevan's budgetary indicators were at an acceptable level: the  budget surplus before the debt movement was at the level of 4% of all  revenues (2016: the budget surplus was 1.5%). This was due to  expenditures made at 53% of the annual budget expenditures, while the  collected revenues accounted for 56% of the annual figures put into  the budget. The agency notes that Yerevan's expenses are likely to  accelerate in the fourth quarter of 2017, which will bring the budget  figures closer to the previously forecasted small deficit. As of the  end of September 2017.  Yerevan did not have any debt or guarantees.   The city retains a debt-free status since the formation of the  municipality in 2008. The provisions of the national legal system  that determine the issuance of debt or the provision of guarantees  limit the attraction of significant borrowings by the city. As of  October 1, 2017 the liquidity position of the city was good with cash  in the amount of 2.5 billion AMD (2016: 1.4 billion AMD). The city  holds cash on treasury accounts, as placing funds on deposits in  commercial banks is legally prohibited.

KEY RATING DRIVERS Yerevan's ratings are constrained by those of  Armenia (December 15, 2017 confirmation at the level of "B +" / with  a revision of the forecast from "Stable" to "Positive") (B+/Stable),  in particular the country's institutional framework for local and  regional governments, which Fitch assesses as weak. The ratings also  factor in the city's capital status, satisfactory budgetary  performance, supported by steady transfers from the central  government, and zero debt.

Fitch expects the city to continue posting satisfactory fiscal  performance with a lower single-digit operating margin in 2017-2019  (2016: 1.6%). The city's operating margin decrease is due to negative  shocks resulting from the protracted slowdown of Armenia's economy in  2014-2015. We project a likely margin consolidation at this level. We  also expect Yerevan to run close to balanced budget in 2017-2019 in  line with historical result (2012-2016: average deficit 0.15%).   Fitch rating notes that  Yerevan's interim fiscal performance was  satisfactory, with a surplus before debt variation of 4% of total  revenue at end 9M17 (2016: surplus 1.5%). This was driven by spending  53% of annually appropriated expenditure, while collected revenue was  56% of the annual budgeted figures. Fitch notes that the city's  expenditure is likely to accelerate in 4Q17, bringing fiscal  performance closer to the previously projected minor deficit. 

According to our base case scenario, the city will continue receiving  financial support from the central government in line with its  historical track record, as current transfers averaged 74% of the  city's operating revenue in 2012-2016.

The city's interim capex by end-3Q17 was in line with 2015-2016, at  7% of total expenditure (2016: 7%). We projected lower capex than the  track record of recent years (2012-2014: average 24%), reflecting the  completion of sizeable infrastructure investments in 2012-2014. Most  capex is funded by central government transfers and donor grants.   Fitch expects the city to continue low capex trend (about 7%-9% of  total spending), to be funded by asset sales and capital transfers  from the central government.

As of end-September 2017 the city was free from any debt or  guarantees. Yerevan has maintained debt-free status since forming a  community in 2008. Statutory provisions of the national legal  framework guiding debt or guarantees issuance restrict the city from  incurring significant debt. The city's interim liquidity position was  healthy, with cash of AMD2.5 billion as of 1 October 2017 (2016:   AMD1.4 billion). The city holds its cash in treasury accounts as  deposits with commercial banks are prohibited under the legal  framework. 

Yerevan is likely to benefit from economic recovery in Armenia. In  its macro forecast Fitch expects full-year growth of the national  economy at about 4.3% to the previous year, with acceleration to 3.6%  in 2018-2019 due to favorable conditions for increasing remittances  and export growth.

As the country's capital and most populated city, Yerevan is  Armenia's largest market with a developed services sector.  At the  same time, Yerevan's welfare indicators remain relatively low in the  international context, due to the moderate GDP per capita in Armenia,  "the Fitch report says.  RATING SENSITIVITIES Changes to the  sovereign ratings will be mirrored on the city's ratings, as Yerevan  is capped by the ratings of Armenia.  In the absence of sovereign  downgrade a significant deterioration of fiscal performance or  material growth in direct risk, would lead to a downgrade. 

Note that on December 1, 2017 the Yerevan Municipality and the  European Investment Bank signed an agreement on the provision of 7  million euros to increase energy efficiency in Yerevan. According to  Mayor Taron Margaryan, the signed agreement with the EIB is  unprecedented in its kind, since for the first time the community of  Yerevan signs a non-sovereign loan agreement. Thus, Yerevan became  the first community to receive a loan from an international  organization without state guarantees. "This, of course, is the best  proof of the confidence of the international organization provided to  Yerevan," he said.

According to the assumption of AmRating analysts, the assignment of  the rating to the Armenian capital is probably conditioned by the  likely plans of the Yerevan mayor's office to enter the loan  obligations market, which has not been reported yet. 

Yerevan became the first community to receive a loan from an  international organization without a state guarantee - this is the  best proof of the confidence rendered to Yerevan.

READ ALL COMMENTS

Кнарик Оганесян
7млн. евро при прямом целевом использовании не только поспособствуют повышению энергетической эффективности, но также улучшат показатели энергетической безопасности.

POST A COMMENT
Input digits     


News
Armenian nuclear power station has a resource for work for another 30  yearsArmenian nuclear power station has a resource for work for another 30 years
IMF hopes for effective work with the new government team on the  issue of economic reforms in ArmeniaIMF hopes for effective work with the new government team on the issue of economic reforms in Armenia
EBRD expressed readiness to finance new long-term health programs in  ArmeniaEBRD expressed readiness to finance new long-term health programs in Armenia
Minister of Agriculture received the delegation of the Austrian  Development AgencyMinister of Agriculture received the delegation of the Austrian Development Agency
Minister: Work on verification of all mining deposits in Armenia will  begin in the very near futureMinister: Work on verification of all mining deposits in Armenia will begin in the very near future
Ministry of Finance and the Eurasian Development Bank are considering  opportunities to expand cooperation areasMinistry of Finance and the Eurasian Development Bank are considering opportunities to expand cooperation areas
WHO to provide consulting support to Armenia in expanding the health  insurance componentWHO to provide consulting support to Armenia in expanding the health insurance component
Lydian Armenia welcomes the call for responsible miningLydian Armenia welcomes the call for responsible mining
Official: Since June 1, Armenian Nuclear Power Plant will be stopped  for repair worksOfficial: Since June 1, Armenian Nuclear Power Plant will be stopped for repair works
Minister: Armenia prefers Russian gas, since it is 10% cheaper than  Iran`sMinister: Armenia prefers Russian gas, since it is 10% cheaper than Iran`s
GeoProMining: Criminal elements in Armenia hinder the activity of  large Russian investorsGeoProMining: Criminal elements in Armenia hinder the activity of large Russian investors
Pashinyan: The State Revenue Committee is tasked to increase the revenue part of the budget several times by removing the shadow economyPashinyan: The State Revenue Committee is tasked to increase the revenue part of the budget several times by removing the shadow economy
At the Armenian consumer market, the annual inflation in April 2018 was 2.4%At the Armenian consumer market, the annual inflation in April 2018 was 2.4%
French company to be consultant in interstate highway M-6 restoration and improvement projectFrench company to be consultant in interstate highway M-6 restoration and improvement project
Armenian PM demands to strengthen control over quality of agricultural products exported to RussiaArmenian PM demands to strengthen control over quality of agricultural products exported to Russia
The annual revaluation of AMD against USD in April 2018 was 1% with inflation of 2.4%The annual revaluation of AMD against USD in April 2018 was 1% with inflation of 2.4%
Armenia counts on the beginning of construction of the second power unit of Yerevan TPP in the very near futureArmenia counts on the beginning of construction of the second power unit of Yerevan TPP in the very near future
Nikol Pashinyan took part in work of 18th Forum of Union of IT Companies (UITE)
RA Ministry of Agriculture intends to continue and expand scope of cooperation with FAO
In the Ministry of Agriculture, EBRD presented Bank`s strategy and priorities for 2018-2019 in Armenia
Armenian Minister of Finance received head of Armenian office of European Bank for Reconstruction and Development
Fitch Affirms ACBA-Credit Agricole Rating at `B +` with Stable  OutlookFitch Affirms ACBA-Credit Agricole Rating at `B +` with Stable Outlook
Pobeda airline offers Rostov-Gyumri flight passengers a transfer to Yerevan
Armenia and Israel will not apply double taxation to business
Armenia`s share in customs duties distribution to increase within EAEU framework
The Armenian government will have the right to set other state tax rates
Armenian government intends to create equal conditions for producers and importers of brandy
Ambassador: Germany is ready not only to maintain current economic ties with Armenia, but also to take steps towards further cooperation.
Armenian government intends to complete all joint programs with IMF
EBRD is ready to assist Armenia, both in the energy sector and in the development of infrastructures


Exchange rates
25.05.2018
RUB7.81-0.05
USD482.760.11
EUR565.36-0.74
GBP644.63-1.83
CAD373.77-1.57
JPY44.100.10
CNY75.59-0.04
CHF486.11-1.02

Experts
Mher Arakelyan:  Armenia`s payment business has great prospectsMher Arakelyan:  Armenia`s payment business has great prospects
Rating-Agentur Expert RA GmbH and AmRating issued an industry report  on Armenia`s banking systemRating-Agentur Expert RA GmbH and AmRating issued an industry report on Armenia`s banking system
Igor Nazaruk: Each planted sprout has the right to a successful prospect if it is cherished and taken care ofIgor Nazaruk: Each planted sprout has the right to a successful prospect if it is cherished and taken care of
Ara Khzmalyan: Armenia is comfortable to Russian touristAra Khzmalyan: Armenia is comfortable to Russian tourist
The Armenian delegation to the US followed the advice of President TrumpThe Armenian delegation to the US followed the advice of President Trump
Outflow of population and passivity of the Diaspora pushes property prices downOutflow of population and passivity of the Diaspora pushes property prices down
Finombudsman: Amendments to the Civil Code on the imposition of fines and penalties will reduce the number of outstanding loans and  non-creditworthy consumersFinombudsman: Amendments to the Civil Code on the imposition of fines and penalties will reduce the number of outstanding loans and non-creditworthy consumers
Vahan Shakaryan: If we promote Armenia, the promotion of economic sectors will not be a run with obstacles, but a light run for short distancesVahan Shakaryan: If we promote Armenia, the promotion of economic sectors will not be a run with obstacles, but a light run for short distances
Gagik Aghajanyan: There is no need to look for alternatives - it is necessary to work and develop actual   directionsGagik Aghajanyan: There is no need to look for alternatives - it is necessary to work and develop actual   directions
Vitaly Nesis: Armenia is very promising from the geological point of viewVitaly Nesis: Armenia is very promising from the geological point of view
The market of OSAGO goes into virtual spaceThe market of OSAGO goes into virtual space
Ishkhan Mkhitaryan: ArCa and Mir complete the technological part of the project of interaction, business for banksIshkhan Mkhitaryan: ArCa and Mir complete the technological part of the project of interaction, business for banks
The second stage of implementation of the program for prolonging the lifetime of the power unit N2 of the Armenian NPP beginsThe second stage of implementation of the program for prolonging the lifetime of the power unit N2 of the Armenian NPP begins
Successful business is forging for years - to the jubilee of IC Successful business is forging for years - to the jubilee of IC "INGO Armenia"
Armen Shahnazaryan: The double increase in the insurance portfolio of EIAA ICJSC by the end of 2018 is quite feasibleArmen Shahnazaryan: The double increase in the insurance portfolio of EIAA ICJSC by the end of 2018 is quite feasible
Expert: Real estate market of Armenia started demonstrating weak  signs of recovery in I half-yearExpert: Real estate market of Armenia started demonstrating weak signs of recovery in I half-year
Amulsar: Ecology and РeopleAmulsar: Ecology and Рeople
GeoProMining - ten years of work for the benefit of the country, at the forefront of gold miningGeoProMining - ten years of work for the benefit of the country, at the forefront of gold mining
SolarOn will become a catalyst for the development of solar energy in  ArmeniaSolarOn will become a catalyst for the development of solar energy in Armenia
Armenia fits well  for installation of container mini hydroelectric power stations, developed by RosatomArmenia fits well  for installation of container mini hydroelectric power stations, developed by Rosatom

Search by date

Government Bonds

 

ISIN AMGB1029A250
Auction ID AMGB1029A250A
Date 12.05.2017
Issue date 29.10.2015
Issue volume (AMD) 50 000 000 000
Maturity date 29.10.2025
Coupon year yield 11.00%
Auction volume (AMD) 1000 000 000 - 2.000 000 000
Auction date 12.05.2017
DLS
Total amount (AMD) 1 000 000 000
Amount of the total bids (AMD) 787 200 000
Amount of the total accepted bids (AMD) 787 200 000
Cut of yield (%) 10,6447
Weighted avrage yield (%) 10,6447
Auction max  yield (%) 10,6447
Auction min  yield (%) 10,6447
Number of participants 5
ArmEx

 

СПРОС (Покупка)

USD

Средневзв. Цена

482,00

ПРЕДЛОЖЕНИЕ (Продажа)

  USD

Средневзв. Цена

-

СДЕЛКИ

USD

Цена откр.

482,00

Цена закр.

482,00

Мин. Цена

482,00

Макс. Цена

482,00

Ср/взв. Цена

482,00

-0.16

Кол-во сделок

1

Объем (инвал.)

200 000

0бъем (драм)

96 400 000

Commented
Gyumri programmers won on hekaton Gyumri programmers won on hekaton "Innovative ideas for tourism development"
Armenian Lori opens a large international ski resortArmenian Lori opens a large international ski resort
A number of light and alcohol industry enterprises of Armenia will be  provided with state supportA number of light and alcohol industry enterprises of Armenia will be provided with state support
Expert: The attitude of Armenian public to the nuclear power industry is demonstrated not by the promiseExpert: The attitude of Armenian public to the nuclear power industry is demonstrated not by the promise
Expert: The biggest gap in procurement legislation is the lack of an institution for accountability for its violationExpert: The biggest gap in procurement legislation is the lack of an institution for accountability for its violation
Maxim Sokolov: Russian Federation remains the main trade partner of  ArmeniaMaxim Sokolov: Russian Federation remains the main trade partner of Armenia
Russian MP: Restoring railway communication between Armenia and  Russia through Abkhazia and Georgia meets the economic interests of  Yerevan and MoscowRussian MP: Restoring railway communication between Armenia and Russia through Abkhazia and Georgia meets the economic interests of Yerevan and Moscow
Amulsar program was awarded a certificate of compliance with ICMC standards in pre-production cycleAmulsar program was awarded a certificate of compliance with ICMC standards in pre-production cycle
Expert: Subsidizing is the worst model of softening the results of price increaseExpert: Subsidizing is the worst model of softening the results of price increase
Fitch improved outlook on Yerevan`s rating from Fitch improved outlook on Yerevan`s rating from "Stable" to "Positive"
Expert: Energy component of the Armenia-EU agreement conceals big threats for ArmeniaExpert: Energy component of the Armenia-EU agreement conceals big threats for Armenia
Armenian Energy Ministry raises permissible threshold of autonomous  generation of electricity on the basis of RES to 500 kW / hArmenian Energy Ministry raises permissible threshold of autonomous generation of electricity on the basis of RES to 500 kW / h
Beeline hosted the largest this year`s "Client`s Day"
Armenian Deputy Energy Minister urged ECC members to pay more  attention to climate change and greenhouse gas emissionsArmenian Deputy Energy Minister urged ECC members to pay more attention to climate change and greenhouse gas emissions
Compensation for OSAGO shows an impressive annual increase Compensation for OSAGO shows an impressive annual increase
In Armenia, imported electric vehicles will be exempt from all types of taxesIn Armenia, imported electric vehicles will be exempt from all types of taxes
David Lokyan: The volume of own incomes of Armenian communities will grow by 10%David Lokyan: The volume of own incomes of Armenian communities will grow by 10%
Human Rights organization Human Rights organization "Driver`s Friend": ban on right-hand drive cars - nothing more than a regular business project
In Q1 2017 foreign investments in the volume of $ 1 billion were  received to the real sector of Armenian economy  with annual growth  of 36.6%In Q1 2017 foreign investments in the volume of $ 1 billion were received to the real sector of Armenian economy with annual growth of 36.6%
Ameriabank is awarded Euromoney Award for Excellence 2017 as Best  Bank of the Year in ArmeniaAmeriabank is awarded Euromoney Award for Excellence 2017 as Best Bank of the Year in Armenia
Chinchilla fur factory will be established in ArmeniaChinchilla fur factory will be established in Armenia
Narek Sargsyan: Southern Avenue constructions are planned to be started this fall in the capital of ArmeniaNarek Sargsyan: Southern Avenue constructions are planned to be started this fall in the capital of Armenia
Thanks to cooperation between VivaCell-MTS and Fuler House-Building Center, 146 families in Armenia received housesThanks to cooperation between VivaCell-MTS and Fuler House-Building Center, 146 families in Armenia received houses
Armenian Ministry of Economy Development and Investment promises to drive the country`s  export extent of GDM to 45% in 5 yearsArmenian Ministry of Economy Development and Investment promises to drive the country`s  export extent of GDM to 45% in 5 years