Armenia considers the possibility of a new emission of Eurobonds  already in 2024

ArmInfo.In 2024, Armenia plans to implement the next and fifth tranche of Eurobonds on the international market. "The funds received from the emission of  Eurobonds will be used to buy back bonds of 2025 maturity," says the  Strategic Program for Government Debt Management for 2022-2024,  approved by the decision of the RA government on July 12, 2021.

The authors of the document remind that on January 26 this year,  Armenia placed among international investors the 4th issue of 10-year  debt securities in the amount of $ 750 million. The established  annual yield of the bonds of the 4th issue was lower than the yield  of the 3rd issue in the amount of $ 500 million - 3.875% (the coupon  rate was 3.6%) against 4.2% in 2019, 7.5% in 2015 the amount of $ 500  million and 6.25% in 2013 (in the amount of $ 700 million with a  maturity of 7 years. The securities were repaid by September 30,  2020). According to the Bloomberg information system, investor demand  for Armenian debt securities in 2021 exceeded $ 2.5 billion. The  initial target for the yield of Eurobonds to maturity in February  2031 was 4.375-4.5% per annum. City Bank, J.P. Morgan Securities plc.  and HSBC Bank Plc are the main underwriters of the 4th issue bonds.

Making their forecasts, the financial authorities of Armenia,  developed the Strategy on the following main macroeconomic indicators  for 2020-2024: real GDP growth from actual minus 7.4% at the end of  2020 to projected positive 4% (6% in 2021, 5, 2% in 2022, 3.7% by the  end of 2023), a deficit from minus 5.4% at the end of 2020 to minus  1.9% projected by the end of 2024 (-4.6% in 2021, - 2.4% in 2022 and  -2.1% in 2023). In these conditions, it is expected that government  debt will show the following dynamics: from an actual 63.5% of GDP in  2021, it will decrease to 62.3%, 60.5% in 2022, 58.7% in 2023 and  56.8% by the end of 2024.

Refinancing risk According to forecasts, 12% of state treasury  revenues will be allocated on interest rates on government debt in  2021  against the actual 12.9% in 2020, 11.9% in 2022, 12.4% in 2023  and 12.5% at the end 2024 year. This item of expenditure will  "absorb" 2.8% of Armenia's GDP in 2021, instead of 3% in 2020, 2.8%  in 2022, 3% in 2023 and the same amount at the end of 2024.

According to the legislator, the state budget of Armenia is to be  "tested for strength" both in 2025 and 2029.  So, if in absolute  terms, 164.7 billion drams were directed to interest rates through  the government debt (against 157.5 billion drams in 2019), then in  2021 the figure will reach 194.7 billion drams, 194.5 billion drams  in 2022. The amount will reach 215.7 billion drams in 2023, 243.5  billion drams by the end of 2024 and all 268.1 billion drams  (approximately $ 540 million) by the end of 2025. The Ministry of  Finance also notes the risks of managing the public debt due to the  fact that three quarters of Armenia's public debt is 75.6% in foreign  currency, and this increases the volatility of the cost of debt  service.  Refinancing risk is illustrated in the government debt  repayment schedule until 2054. Thus, according to the data of the RA  Ministry of Finance, the largest repayment is scheduled for 2025 and  2029, which is due to the maturity of the previously issued bonds,  which, respectively, account for 47.9% and 46.6% of the debt to be  repaid in the reporting year.  It should be noted that as of June 30,  2021, Armenia's public debt amounted to $ 8 billion 869 million.   Thus, over 6 months, the indicator increased by $ 901 million or  11.3%. It should be noted that over its 28- year history (since  Armenia gained independence), the Republic of Armenia has attracted  about $ 6.8 billion in loans, and over the past three years has  "managed" to increase the national debt by more than $ 2 billion.