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EBRD LAUNCHES INAUGURAL BOND ISSUE IN ARMENIAN DRAM
Cbonds. Info
Feb 3 2014
03.02.2014 - Cbonds
The European Bank for Reconstruction and Development (EBRD) has issued
its first-ever bond in Armenian Dram (AMD), helping to drive forward
the development of the local capital market and providing funds for
the EBRD's own lending to the Armenian economy in local currency.
The one-year bonds for a total of AMD 2 billion (approximately USD
$5 million) were placed via an auction on the NASDAQ OMX Armenia
exchange in Yerevan on 31 January.
This was the first publicly-auctioned issue by either a foreign
borrower or an international financial institution on NASDAQ OMX and it
was also the first floating rate note to be issued on the local market.
"This is a very significant step for the Armenian capital market and
opens the way for further capital raising in Armenia by those seeking
to on-lend AMD to the real economy, thereby ensuring a better fit for
borrowers who want to avoid foreign currency risk ," said Mark Davis,
Head of the EBRD Yerevan Office.
"As a floating rate note, it also provides a useful liquidity
management tool for banks, which the application to the Central Bank
of Armenia for repo-eligibility should further enhance."
This issue is the latest milestone in the EBRD's Local Currency and
Capital Markets Development Initiative that was launched in May 2010
in the wake of the global economic crisis to tackle the problems of
excessive reliance on foreign capital and foreign exchange borrowing
in emerging economies.
The crisis had highlighted the problems facing borrowers who were
unable to pay back their foreign currency loans in the face of a
sharp depreciation of their own currencies.
The EBRD's response has aimed to encourage borrowing in the local
currency and also to develop or strengthen local capital markets and
so increase the supply of locally-sourced finance.
The EBRD made its first local currency loan, in Hungarian Forint,
in 1994.
Its first loan in Dram was signed in March 2010 and it has since
extended a further 22 loans for an overall total of AMD 67.86 billion
(USD 170 million approximately), including most recently a financing
package worth the equivalent of US$ 12.5 million to provide credits to
micro, small and medium-sized enterprises and also to support energy
efficiency lending.
The EBRD's issuance in Dram supports the Armenian authorities'
programme of reforms aimed at reducing dollarisation in the economy
and stimulating locally-generated savings.
The semi-annual coupon rate on the EBRD's inaugural Dram bond issue was
linked to the 6-month AMD T-Bill rate, which is used by the interbank
market for reference pricing, and which is also used by the Central
Bank of Armenia for repo transactions.
Ameriabank CJSC and HSBC Bank Armenia CJSC acted as advisers and
agents to the issuer.
http://www.cbonds.info/cis/eng/news/index.phtml/params/id/700487
Cbonds. Info
Feb 3 2014
03.02.2014 - Cbonds
The European Bank for Reconstruction and Development (EBRD) has issued
its first-ever bond in Armenian Dram (AMD), helping to drive forward
the development of the local capital market and providing funds for
the EBRD's own lending to the Armenian economy in local currency.
The one-year bonds for a total of AMD 2 billion (approximately USD
$5 million) were placed via an auction on the NASDAQ OMX Armenia
exchange in Yerevan on 31 January.
This was the first publicly-auctioned issue by either a foreign
borrower or an international financial institution on NASDAQ OMX and it
was also the first floating rate note to be issued on the local market.
"This is a very significant step for the Armenian capital market and
opens the way for further capital raising in Armenia by those seeking
to on-lend AMD to the real economy, thereby ensuring a better fit for
borrowers who want to avoid foreign currency risk ," said Mark Davis,
Head of the EBRD Yerevan Office.
"As a floating rate note, it also provides a useful liquidity
management tool for banks, which the application to the Central Bank
of Armenia for repo-eligibility should further enhance."
This issue is the latest milestone in the EBRD's Local Currency and
Capital Markets Development Initiative that was launched in May 2010
in the wake of the global economic crisis to tackle the problems of
excessive reliance on foreign capital and foreign exchange borrowing
in emerging economies.
The crisis had highlighted the problems facing borrowers who were
unable to pay back their foreign currency loans in the face of a
sharp depreciation of their own currencies.
The EBRD's response has aimed to encourage borrowing in the local
currency and also to develop or strengthen local capital markets and
so increase the supply of locally-sourced finance.
The EBRD made its first local currency loan, in Hungarian Forint,
in 1994.
Its first loan in Dram was signed in March 2010 and it has since
extended a further 22 loans for an overall total of AMD 67.86 billion
(USD 170 million approximately), including most recently a financing
package worth the equivalent of US$ 12.5 million to provide credits to
micro, small and medium-sized enterprises and also to support energy
efficiency lending.
The EBRD's issuance in Dram supports the Armenian authorities'
programme of reforms aimed at reducing dollarisation in the economy
and stimulating locally-generated savings.
The semi-annual coupon rate on the EBRD's inaugural Dram bond issue was
linked to the 6-month AMD T-Bill rate, which is used by the interbank
market for reference pricing, and which is also used by the Central
Bank of Armenia for repo transactions.
Ameriabank CJSC and HSBC Bank Armenia CJSC acted as advisers and
agents to the issuer.
http://www.cbonds.info/cis/eng/news/index.phtml/params/id/700487