Monday, May 20 2013 19:42
Armenia is getting ready to enter international bond market
ArmInfo. Armenia will issue Eurobonds for the first time, Armenian Prime Minister Tigran Sargsyan said in Parliament on Monday.
He said that an attempt is being made to enter the international market. This project has been discussed over the past 15 years. Here a big role belonged to the experience of Georgia that successfully issued such bonds several years ago. In order to finance the budget deficit, Armenia attracted financial resources at low interest rates, and this allowed Armenia to turn from a low-income country into a middle-income country. As a result, loans at lower interest rates will become unavailable for Armenia. "In 2009 Armenia attracted the 500 mln USD stabilization loan from Russia at the rate of Libor+3%, and if we manage to place the Eurobonds at low interest rates, which is quite probable, we'll be able to redeem the Russian stabilization loan ahead of time. This will facilitate the foreign debt repayment", the Premier said.
Sargsyan said that "Cleary Gottlieb Steen & Hamilton LLC" and "Baker & McKenzie LLP" were selected as consultants on the issue of Armenian Eurobonds. These companies' representatives were invited to Armenia to make their suggestions and the Armenian Finance Ministry, Central Bank and Justice Ministry participated in the discussion. Sargsyan stressed that Armenia will enter the international bond market for the first time and it needs professional support to gain skills in this sphere and observe the listing in the international markets.
The Premier pointed out that the decision to issue the Eurobonds opens a new page in the economic policy of the country. In case of successful issue, Armenia will redeem the interstate loan from Russia, because the countries with the 2B rating can attract cheaper resources.
To note, in November 2011 Moody's Investors Service changed the outlook for Armenia from "stable" to "negative" and pointed out the growing risks of slowdown of the country's economic growth rates due to possible unfavorable change of the economic situation in Europe and Russia. The agency retained the country's Issuer Default Rating in foreign and local currencies at "Ba2". The country ceiling outlook for foreign exchange deposits was "Ba3".
In August 2012 Fitch Ratings reaffirmed Armenia's long-term foreign and local currency Issuer Default Rating at "BB-", the outlook for long-term Issuer Default Rating was "stable". At the same time, the agency reaffirmed the country's short-term foreign currency Issuer Default Rating at "B" and the country ceiling rating - at "BB".
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