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Azerbaijan prepares to borrowings on local, international capital markets

In 2015, the ministry of finance of Azerbaijan intends to explore the conjuncture on the domestic and international financial markets for placement of government bonds with face-value in foreign and local currencies.

Azerbaijani President Ilham Aliyev gave relevant instruction in the decree on the application of the law “On State Budget for 2015” signed Dec.22.

The ministry of finance was instructed to determine the amount, terms of circulation and other options for the release of government bonds, depending on market conditions.

The Finance Minister Samir Sharifov previously said that the Azerbaijani government may consider the possibility of issuing sovereign bonds in euros.

“We can consider the issue of placement of Eurobonds on the international capital market, which will depend on the situation on the market,” said Sharifov. “It will also become a benchmark for the private sector in Azerbaijan.”

On March 10, 2014 the first-ever placement of sovereign bonds of the country took place. The volume of placement amounted to $1.25 billion, the repayment term – 10 years. Demand for the placement exceeded its volumes by four times and attracted the attention of investors from 160 countries. Investors from the United States acquired about half of the placement. British investors bought 25 percent of the bonds, investors from Germany – 18 percent, and the remaining 10 percent were purchased by buyers from other countries, including Singapore and Israel. Profitability of the issue amounted to 222 basis points (bps) to US Treasuries.