Monday, September 30 2019 21:51

ArmInfo. In order to ensure publicity and transparency in the use of funds received from the placement of the 3rd tranche of Armenian Eurobonds, the Government of  Armenia at a special meeting on September 30 decided to send funds to  the country's budget in 2019. This was noted in the press service of  the RA Government.

According to the justification, on September 19, 2019, Armenia placed  the third tranche of government bonds in foreign currency in the  amount of $ 500 million, from the placement of which $ 489.9 million  was received. At the same time, a partial redemption of $ 402.4  million was made on foreign currency government bonds due in 2020  (1st issue), for which $ 427.9 million was paid, including the face  value of the purchased bonds, the extra charge and the amount of the  discounted coupon. The amount due is paid at the expense of funds  received from the placement of the 3rd tranche of foreign currency  government bonds on September 19, 2019. "The above amount of $ 489.9  million, as well as the directions for its use, should be reflected  in the RA Law on the State Budget of 2019 to ensure publicity and  transparency of all budget revenues and expenses," the decision of  the Government notes.

Another decision proposes to add in 2019 the amount of 9-month and  annual appropriations of the Government Debt Management program  stipulated by the state budget for government bonds in foreign  currency and listing. The purpose of the proposed changes is to  ensure the timely and full implementation of the obligations  undertaken by the government through the servicing and listing of  government bonds in foreign currency.

It should be noted that Armenia on September 19, 2019 announced the  release of the third tranche of Eurobonds - 10-year maturity in the  amount of $ 500 million with a coupon yield of 4.625% per annum on  international markets. The next day, on September 20, applications  for the purchase of Armenian sovereign bonds in international markets  exceeded the offer volume 5-fold, amounting to $ 2.5 billion. The  organizer of the issue opened an application book the day before it  announced the start of placement of these 10-year Eurobonds.  Significant prevalence of demand over supply (5-fold )  led to a  decrease in the yield rate to 4.2% per annum, and the coupon rate was  3.95%. Earlier, ArmInfo reported that the Government of Armenia on  July 4 approved a draft decision "On Establishing the Specifics of  Organizing Procedures for Acquiring Services for the Issue, Placement  and Redemption of Eurobonds", thereby starting the preparatory  process for placing the 3rd tranche of Eurobonds and refinancing debt  previously issued securities.

The third tranche of Armenian Eurobonds in 2019 was an expected  event. Indeed, according to the schedule of 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 "pay out" about 417  billion drams or $ 857 million (the calculated exchange rate of the  Armenian dram to the dollar is $ 1 = 486.55 drams), and in 2025, to  repay the principal amount of all government debt formed at the end  of December 2018. In 2025 the price of the issue will be about 406  billion drams ($ 834 million). In both cases, $ 500 million of this  amount are repayments on Eurobonds. It is on the basis of these  calculations that the experts predicted the issue before / or in 2020  - before the next payment of the debt on the first tranche, which is  scheduled for September 30, 2020.

To recall, the debut issue of Armenian Eurobonds was carried out on  September 19, 2013, in the amount of $ 700 million 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 average yield of these Armenian sovereign  securities is currently 3.19%. The second tranche of sovereign bonds  in the amount of $ 500 million with a maturity 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. The average yield is currently estimated at 3.97%.