CB Governor on 7.1% yield on Eurobonds: I don`t see anything outrageous

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.