YEREVAN, September 23. / ARKA /. Armenian foreign-currency bonds will help the local corporate sector to diversify their sources of financing, says managing partner of EV Consulting Manuk Yergnyan.
In an interview with ARKA he said the first issue of foreign-currency bonds is a significant step for any emerging economy and a bid for a higher status.
According to Yergnyan, Armenian eurobonds will serve as a guide for the formation of real interest rates in foreign currency and will eliminate the strain in the yield curve. “This is one of the key features of Eurobonds,” he said.
He said the average interest rate used to fund local banks is 6.5-7 percent. This figure is impacted also by funds raised outside the country. Therefore, the issue of euro bonds in the medium term can drag up interest rates.
“The key factor influencing the economy also is how the funds will be used,” he said.
On September 19 the Armenian finance ministry sold $750 million seven-year bond to price at a yield of 6.25%, attracting $3.25 billion in orders. The underwriters are Deutsche Bank AG, HSBC Bank plc and JPMorgan Securities plc.
Fitch Ratings had earlier assigned the Republic of Armenia’s upcoming USD-denominated notes an expected ‘BB-(EXP)’ rating. Last Friday Moody’s Investors Service lowered its foreign-currency bond ceiling on Armenia, citing the country’s low institutional strength and limited financial and trade openness. Now the highest rating that can be assigned to a domestic issuer in foreign currency in Armenia is Ba1, down from Baa.-0-
