ArmInfo.Armenian government will refinance Eurobonds. This June 13, presenting at the plenary meeting of the National Assembly of the report on the implementation of the budget of the country in 2017, said the Minister of Finance of Armenia Atom Janjughazyan.
According to him, it is possible that the new issue of Eurobonds will occur until 2019. The funds received as a result of refinancing will be used to repay the previous debt on Eurobonds in the amount of $ 500 million. "There is no precedent in the world when the entire amount is paid," the Finance Minister said, adding that in the process of economic growth, the state debt will be gradually repaid countries. He also said that 122 billion drams were allocated to service the state debt, which exceeded the $ 6 billion mark, in 2017. Last year the head of the Department for the Management of the State Debt of the Ministry of Finance of Armenia Arshaluys Margaryan told ArmInfo that the Armenian government plans to issue a new issue of Eurobonds only in early 2020. According to him, if by the end of 2019 Armenia does not face an unconventional situation, when the only solution is a new issue of Eurobonds, another issue is expected to ensure the repayment of the state debt in 2020. The volume of the issue, as noted by Margaryan, will be similar to the amount that will be spent on servicing the state debt on Eurobonds - $ 500 million or even slightly higher.
The next placement of Eurobonds, as the representative of the Ministry said, can not be an end in itself. Before taking such a decision, the potential of the domestic capital market, the prospects for raising funds from external sources will be explored. "Otherwise, this phenomenon is very dangerous." This measure can not be resorted to without studying all the pros and cons," Arshaluys Margaryan said, noting that due to the high degree of foresight in such matters, the relevant experts of the Ministry of Finance deserved the appreciation of international partners.
To date, Armenia has carried out two issues of Eurobonds. The first issue was made on September 19, 2013, Eurobonds were issued for $ 700 million with a maturity of 7 years until March 30, 2020, the yield was 6.25%. The government repaid ahead of schedule the loan taken from Russia for $ 500 million. The main underwriters were Deutsche Bank AG, London Branch, HSBC Bank plc and J.P.Morgan Securities plc. The yield of Armenian Eurobonds from September 2013 to the end of January 2014 decreased from 6.25% to 5.85-5.8% to about $ 56 million, and at the end of 2015 it increased to 6.76%, at the end 2016 decreased to 4.99%.
The second tranche of sovereign bonds worth $ 500 million for a period of 10 years and with a yield of 7.5% was made by Armenia on March 19, 2015. The proceeds from the second issue of Eurobonds amounted to $ 487 million. A part of the amount received from the sale of these bonds in the amount of $ 205 million, went to buy out the first issue of bonds with redemption in 2020. The remaining amount was transferred to the treasury account of the Republic of Armenia and the country's budget system. As Former Deputy Finance Minister previously told ArmInfo, and now the head of the agency Atom Janjughazyan, the second issue of Eurobonds turned out to be successful. He is sure that if there had been no repayment of $ 200 million of debt in 2015, servicing Armenia's national debt in 2020 would not have cost $ 921 million, and it will have exactly the same amount needed to service the existing state debt as of October 31, 2016, and $ 921 million plus $ 200 million, which "would be a real nightmare for the budget." Meanwhile, experts said that this, in fact, was the most expensive external debt that was ever attracted by the government of the country.
However, that due to the growing national debt, which amounted to $ 6.9 million today, and high migration, the specific debt load per capita exceeded $ 2,000, of which over $ 1.7 thousand fell to the share of external debt (against $ 550 in 2009). Taking into account the real scale of migration, the burden of public debt per capita would be much higher (according to the statistical data for 2011-2016 the population of the RA decreased from 3.274 million to 2.987 million).