Armenia hopes for much higher country rating after signing of Washington declarations - minister

ArmInfo. Armenian Finance Minister Vahe Hovhannisyan states that Armenia has previously expressed disagreement with the international credit ratings assigned to the country. Now, after the signing of the Washington Declarations, financial authorities hope that the country's ratings will "return to natural levels." This was stated by RA Minister of Economy Gevorg Papoyan on September 24 at a panel discussion titled "Armenia's New Reality as an Economic Shock" as part of the forum "The Future of the Banking System: Innovations and Development Prospects."

According to Hovhannisyan, Armenia's risk premium was already declining before August 8 and the Washington Declarations. "We saw a curve that was trending downward, and after August 8, the premium curve sharply declined," he said.

As the minister indicated, consultations with international rating agencies had previously been conducted on the basis that Armenia disagreed with the country ratings assigned to it, given the existing macroeconomic indicators, the level of stability, and the cautious nature of its fiscal policy. "We were consistently advised of the regional risk and its significant impact on the rating assessment, and we hoped for a significant reduction in this risk after August 8. Of course, there were some positive signals from Fitch, Moody's, and S&P, but it was also stated that the impact on the rating would be noticeable after the signing (of the peace agreement between Armenia and Azerbaijan - ed.)," the minister noted.

At the same time, as the head of the Ministry of Finance pointed out, the reaction of real investors to these events is far more important. In this context, he recalled that the latest fifth tranche of Armenian Eurobonds was issued at an interest rate close to that of Romanian bonds, much lower than the interest rate on Georgian and Jordanian Eurobonds. "In this regard, we are pleased and must continue to work in this direction," said Vahe Hovhannisyan.

In its statement on August 20 Fitch Ratings pointed out that "The declaration aligns with our expectation that a return to military conflict is unlikely, but this remains a preliminary framework with no agreed timelines for building the transit corridor or signing a binding treaty. Tangible benefits to economic growth, government revenues and trade will take a few years at least to materialize."

It is also worth noting that the 5th tranche of Armenian Eurobonds took place on March 5, 2025. Armenia placed Eurobonds on international stock markets in the amount of $750 million, with a yield of 7.1% and a maturity of 10 years (settlement date: March 12, 2025). The coupon yield on the new Eurobonds was 6.75%. The Eurobonds were listed on the London Stock Exchange (LSE).

International rating agencies assigned the following ratings to Armenian sovereign bonds:  BB- (stable) from S&P, BB- (stable) from Fitch, and Ba3 (stable) from Moody's.

This is the fifth tranche of Armenian Eurobonds on the international capital market, the issuance of which was envisaged by the RA Law on the State Budget for 2025 and included in the 2025 Borrowing Program. Net proceeds from the Eurobond issue will be used to finance the state budget deficit (609 billion drams - ed.).

As the Minister of Finance told an ArmInfo correspondent, demand for Armenian Eurobonds was three times higher than the placement volume. He reported that investors in the Armenian securities were primarily companies from the UK and the US, accounting for 45% and 34%, respectively. European investors accounted for 14%, and investors from the Middle East and North Africa accounted for 5%. According to him, holders of the Armenian securities included institutional investment companies, pension funds, hedge funds, and, to a lesser extent, banks. JPMorgan, Citibank, and Credit Agricole Bank acted as underwriters for the Armenian sovereign bonds.