Monday, July 8 2019 19:01

ArmInfo.Today, Armenia has not  decided on the issue volume of the third tranche of Eurobonds, which  is expected to be directed to refinancing the debt on 7-year issued  securities in 2013. This was reported to ArmInfo correspondent in the  Department of Public Debt Management of the Ministry of Finance of  the Republic of Armenia.

Earlier, on July 4, the Government of Armenia approved the draft  decision "On establishing the specifics of organizing procedures for  the acquisition of issuance, placement and redemption of Eurobonds",  thus launching the preparatory work for the placement of the third  tranche of Eurobonds. As Minister of Finance of Armenia Atom  Janjugazyan said, the new, third in a row, issue of Eurobonds will be  at least similar to the amount that will be sent to pay off debt on  Eurobonds - $ 500 million and will take place before paying the debt  on the first tranche scheduled for September 30, 2020. The document,  as the minister explained, will assist the proper organization of the  redemption process for the first tranche. In particular, the  procedures for the acquisition of services necessary for the  implementation of the refinancing process of Eurobonds, and  attracting international underwriters and legal advisers will be  defined.

According to the head of the government debt management department,  Arshaluys Margaryan, within the framework of the decision approved by  the Cabinet of Ministers, the Ministry of Finance will contact the  top 5 law firms and 10 international banks (underwriters through  which Eurobonds are placed) to organize the process, according to the  rating of the strongest banks in the world from Bloomberg. On July  11, applications from law firms will be opened, and on July 18 - from  underwriters. After evaluating the applications, the application of  one legal consulting company and 1-3 banks will be approved as lead  managers and underwriters. Cleary Gottlieb Steen & Hamilton, an  international law firm, was engaged in legal consulting of previous  tranches. Then the Ministry of Finance will turn to selected  international consultants, and they will be consulted on the dates  and volumes of the future tranche. Based on a comprehensive analysis,  as indicated by the head of the Department, an appropriate decision  will be made.  Recall that according to the schedule of repayment of  government debt, until 2054, the 2020 th and 2025 will be the most  peak in servicing the public debt. In 2020, Armenia will have to "lay  out" about 417 billion drams or $ 857 million (the estimated exchange  rate of the Armenian dram to the dollar $ 1 = 486.55 drams) to repay  the principal amount on all government debt generated by the end of  December 2018, and in 2025 issue price will be about 406 billion  drams ($ 834 million). In both cases, the redemption of Eurobonds is  $ 500 million of this amount.

Note that today, Armenia has carried out two issues of Eurobonds. The  first issue was made on September 19, 2013, and $ 700 million worth  of Eurobonds were issued with a maturity of 7 years, until September  30, 2020. The yield on placement was 6.25%. They were repaid by the  government ahead of time a $ 500 million stabilization loan taken  from Russia. The main underwriters were Deutsche Bank AG, London  Branch, HSBC Bank plc and J.P.Morgan Securities plc. The average  yield of these Armenian sovereign bonds is currently 3.19%.

The second tranche of sovereign bonds in the amount of $ 500 million  for a period of 10 years and with a yield of 7.5% was implemented by  Armenia on March 19, 2015. Proceeds from the second issue of  Eurobonds amounted to $ 488 million. A part of the amount received  from the sale of these bonds in the amount of $ 200 million went to  redeem the first issue of bonds maturing in 2020. The remaining  amount was transferred to the single treasury account of Armenia and  sent to the budget system of the country. The current average yield  is estimated at 3.97%.