YEREVAN, March 31. / ARKA /. Proceeds raised from the second issue of Eurobonds should be used to stimulate the economy, World Bank country manager for Armenia Laura Bailey said today.
She said the World Bank believes it is very important that the proceeds be used to stimulate economic activity in the country and assist the most vulnerable segments of the population in the next two years.
She noted that the buildup of external debt is important in terms of its ratio to GDP and to where the resources will be directed to. According to Ms. Bailey, the best way to use the resources is to boost production capacities and incomes and get out of the current difficult economic situation.
According to official data, Armenia raised $487.84 million from the second issue of Eurobonds after selling a $500 million 10-year dollar bond for only the second time on record on March 19, paying a yield of 7.5%. International law firm Cleary Gottlieb Steen & Hamilton LLC was hired by the Armenian government to act as an international consultant for the issue, while Deutsche Bank, HSBC Bank and JP Morgan acted as underwriters.
Some $205.8 million of the proceeds were used to buy back previous dollar bond issue carried out in 2013. Also about 40 billion drams will be used to finance Armenia’s budget deficit and “neutralize” the Russian recession’s spillover effects on the Armenian economy.
According to deputy finance minister Pavel Safaryan, the remaining money will be channeled into the Stabilization Fund to enable the government to maintain fiscal stability and to fully finance its spending items.
Armenia first issued $700 million worth dollar-denominated bonds in September 2013 at the yield of 6.25 percent. According to Armenian finance ministry, investors were ready to buy as much as $3 billion worth of Armenian external bonds.
The bulk of $700 million was used to repay a $500 million Russian loan ten years ahead of schedule. ($1 – 471.21 drams). –0–
