Monday, July 8 2019 18:59

ArmInfo. Armenia tomorrow will  announce the placement of 10-year bonds in an unprecedented amount -  at $ 100 million. On July 8, Head of the State Debt Management  Department of the Ministry of Finance of Armenia Arshaluys Margaryan  told ArmInfo.

 "In fact, Armenia has been in the bond market for about 30 years - the first issue was made in 1995 - at the rate of $ 100 thousand," recalls Margaryan. Since 1997, began the regular issuance of medium - and long- term borrowing, for a period from 1  year to 30 years. And today, the maximum volume of one-time 10-year  bonds amounted to about 60 million. Bonds of 50-60 billion drams have  so far been placed with a maturity of 20-30 years.

The head of the department is confident that the volume of domestic  savings in Armenia is quite impressive. "Attracting these savings  requires creating an atmosphere of mutual trust. And today I am  deeply convinced that there is an appropriate environment of mutual  understanding and trust of the parties," said Arshaluys Margaryan.

Back in December 2018, at the meeting with participants of the  capital market, the Ministry of Finance of Armenia reported that the  department was reviewing its policy and, if long-term securities were  mainly targeted, the 10-year government bonds will henceforth become  the central benchmark. The moment for placement was chosen on the  basis of a comprehensive analysis and forecast of the behavior of  domestic financial market players, as well as projected demand.

Thus, it is planned that tomorrow the Ministry of Finance will hold  an auction for placing bonds worth 40 billion drams. For those who  purchased these bonds the next day, bonds worth 8 billion drams (20  percent from 40 billion drams) will be offered at the weighted  average auction price (in the primary market). And another 10 percent  or 4 billion drams will be posted on the site of the treasury  depository for its acquisition, including ordinary citizens without  fees.

Tomorrow's auction, as Margaryan pointed out, will be one of the  three significant events in the Department's "life" - the first is  dated March 7, 2000, when Armenia was the first in the entire  post-Soviet space to issue debt obligations with a circulation period  of more than 12 months - 15 months. The second - September 23, 2004 -  7-year state bonds were issued in Armenia for the first time, which  replaced the 5- year one. "The main thing here is to bring into  circulation government bonds to interest an external investor, who  can thus understand the capital market of the issuer, the" weight "of  its currency, be able to follow the behavior of government bonds and  the behavior of participants in the capital market, and if desired,  also quickly become a holder of state security, "- he pointed out.

Thus, despite the fact that the next issue targets the domestic  market, it is expected that a one-time placement of government bonds  for $ 100 million will attract the attention of external market  players. The Ministry of Finance is confident that tomorrow's auction  will be closely monitored from the outside as well, since in a  certain sense it is from this threshold - both in terms of the volume  of a one-time issue and the term of placement - the "zone of  interests" of the external player begins.

ArmInfo experts believe that the success of this large placement will  in a certain sense determine the success and cost of the expected  third tranche for Armenian Eurobonds. This will also allow the issuer  of state bonds - the government of Armenia, on the international  securities market to act, so to speak, from strong positions  dictating conditions.