Fitch Ratings assigns expected B + (EXP) rating to Armenia`s  forthcoming Eurobonds

ArmInfo. Fitch Ratings has  assigned Armenia's forthcoming US dollar bonds an expected rating of  'B+(EXP)'. This news was published by Fitch on September 10.

The final rating is subject to the receipt of final documentation  conforming to information already received, the Fitch notes.

KEY RATING DRIVERS

The expected rating is in line with Armenia's Long-Term  Foreign-Currency Issuer Default Rating (IDR) of 'B+' with a Positive  Outlook.

RATING SENSITIVITIES The rating on the bonds would be sensitive to  any changes in Armenia's Long-Term Foreign-Currency IDR.  Fitch  affirmed Armenia's Long-Term Foreign- and Local-Currency IDRs at 'B+'  with a Positive Outlook in May 2019.

According to the Ministry of Finance, at the end of July 2019,  Armenia did not decide on the issue volume of the third tranche of  Eurobonds, which, as expected, will be used to refinance the debt on  7-year issued securities in 2013. Earlier, on July 4, the Armenian  Government approved a draft decision "On Establishing the Specifics  of Organizing Procedures for Acquiring Services for the Issue,  Placement and Repurchase of Eurobonds", thus starting the preparatory  work for the placement of the third tranche of Eurobonds.

The volume of the issue of a new, third in a row, issue of Eurobonds,  according to the Minister of Finance, will be at least similar to the  amount that will be sent to repay the debt on Eurobonds - $ 500  million and will be held before the debt is paid on the first  tranche, scheduled for September 30, 2020. To organize the process,  the Ministry of Finance will appeal to the 5 best law firms and 10  international banks (underwriters through which Eurobonds are  placed), according to the ranking of the world's strongest banks from  Bloomberg. Legal advice to previous tranches was provided by Cleary  Gottlieb Steen & Hamilton, an international law firm.  To recall,  according to the schedule for repayment of government debt, until  2054, the most peak in servicing the public debt will be 2020 and  2025. In 2020, Armenia will have to "allocate" about 417 billion  drams or $ 857 million to repay the main amount of all government  debt formed at the end of December 2018, and in 2025 the issue price  will be about 406 billion drams ($ 834 million) . In both cases, $  500 million of this amount are repayments on Eurobonds. It should be  noted that today Armenia has carried out two issues of Eurobonds. The  first issue was carried out on September 19, 2013, Eurobonds worth $  700 million were issued with a maturity of 7 years, until September  30, 2020. The yield on the placement was 6.25%. The government repaid  ahead of schedule 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 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. Part of the amount received from the sale of these bonds  in the amount of $ 200 million went to the redemption of the first  issue of bonds with maturity in 2020. The remaining amount was  transferred to the single treasury account of Armenia and sent to the  budget system of the country.