Monday, May 20 2013 21:28
Expert: Issue of eurobonds will cost Armenia 6%-8% annually
ArmInfo. Armenia's efforts to issue eurobonds in the international market of debt securities will, most probably, cost it 6%-8% annually, Aram Kayfajyan, CEO at Armenbrok Investment Company, told ArmInfo. He explained that eurobonds with up to 5% yield will not be in demand in the market.
Commenting on the cons and pros of the new initiative of the country's economic authorities, A. Kayfajyan said that Armenia can spark long-term interest of foreign investors in the treasury stock and corporate bonds through issue of eurobonds. He is sure that in such way the authorities open the international debt market for the companies.
In addition, the country (consistently growing economic indicators) will manage to create the necessary investment image abroad.
"Armenia will take a certain place on the world investment map. In case of success, the country will manage to gain confidence of big institutional investors in future," he said.
This will make the country less dependant on one investor. Borrowing 'cheap' funds from strategic partners, he said, the country becomes dependent on them, which is fraught with negative consequences.
Nevertheless, the expert said, issue of eurobonds is not the most affordable way to raise funds to refund a cheaper debt, specifically the Russian stabilization loan ($500 mln underLibor+3%).
"However, for lack of alternative means to raise funds, issue of eurobonds is the most optimal decision at present," he said.
To recall, Prime Minister Tigran Sargsyan announced at the Parliament Monday that Armenia is preparing to enter the world market of debt securities. Sargsyan said that "Cleary Gottlieb Steen & Hamilton LLC" and "Baker & McKenzie LLP" were selected as consultants on the issue of Armenian Eurobonds. 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. At the same time, he did not mention the technical parameters of the upcoming issue.
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