ArmInfo. The Armenian government's decision to place the next tranche of Eurobonds (totaling $750 million - ed.) is a right step, especially since the intention to issue them was announced in advance. This was noted by the Chairman of the Central Bank of the Republic of Armenia, Martin Galstyan, during a press conference on March 18.
He emphasized that the issue of Eurobonds, requires, at least, several months of work. "It is impossible to announce the issuance of Eurobonds today and have them issued tomorrow," the head of the Central Bank explained. Regarding the 7.1% yield on Armenian Eurobonds, Galstyan referred to the risk-free rate of 10-year US government bonds, which is 4.3%. "This means that the debt on these loans in the US costs 4.3% per annum, while on Armenian Eurobonds the RA government incurs a debt at 7.1% per annum. The difference of 2.8% in the period under review is a normal spread. I do not see anything outrageous in this," he noted, emphasizing that the market itself assessed the size of the risk premium (risk premium - excess return on investment compared to risk-free). Touching on the country risk premium, Galstyan noted that it has hardly changed.
"That is, investment interest in Armenia is currently at this rate. However, we should focus on the risk premium rather than the rate, " the head of the Central Bank said. Referring to the research of rating agencies that have assigned ratings to Armenia, he noted that the latter contain a component related to geopolitical tensions. "And if geopolitical tensions decrease, we could receive a higher rating, ultimately reducing the country's risk premium." According to him, at the moment, Armenia's risk premium is within 280-290 basis points, comparable to countries with similar ratings.
