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Success for Georgia’s first international bond issue

By Christina Tashkevich
Monday, April 14
Georgia sold its first international bond issue last week with over 100 investors participating in the deal.

The USD 500 million 5-year fixed-rate Eurobond was oversubscribed by more than three times, deal managers JPMorgan Chase & Co. and UBS said after the deal.

“Half of the deal went to the UK and around 13 percent went to offshore US accounts,” director of emerging markets syndicate at UBS Simonas Eimaitis told journalists.

Deal managers reported that the demand for the bonds, which offered a 7.5 percent return, stemmed from “Georgia’s successful economic reforms, impressive credit story, its diversification appeal [and] the overall [global] lack of sovereign supply.”

It is the first sovereign bond issue from Georgia. In 2007 the private Bank of Georgia issued five-year unsecured Eurobonds with a total value of USD 200 million.

Analysts at local investment company Galt and Taggart said the bond offered investors higher yields compared with similar bonds.

“A Ukraine bond which matures in 2013 was trading at 6.06 percent on [April 7], when the Georgian deal was priced,” Galt and Taggart financial analyst Giorgi Iremashvili said in a statement.

Two major international rating agencies evaluated the Georgian bonds right after their sale.

Fitch Ratings assigned Georgia’s Eurobonds a BB- rating, noting “an impressive record of structural reforms and massive foreign direct investment inflows.”

“However, political and economic weaknesses, including a substantial current account deficit, pose risks to the country's rapid development path,” said Edward Parker, head of Emerging Europe sovereigns at Fitch.

Standard & Poor’s assigned a B+ long-term rating to the Eurobonds.

Prime Minister Lado Gurgenidze has suggested some of the income from the Eurobonds issue will go toward building a natural gas storage terminal and electricity transmission lines connecting Georgia and Turkey.