Georgia targets at new Eurobonds emission
24 February, 2011
Georgia targets at new Eurobonds emission

Georgia aims at its second Eurobond emission this year. Government finds it good for the country’s international image. Some economic analysts think the second emission is reasonable only to cover the first emission.
Gross external debt of Georgia, which goes above USD 9. 379 billion [out of which USD 4 billion is the state debt] is supposed to grow at least by USD 500 million this year. Georgian government has resolved to issue the second sovereign Eurobonds by the end

of the year, Kakha Baindurashvili, Minister of Finances said on February 7, 2011. According to him, maturity period of the new loan is to be extended to 7-10 years [unlike the five-year USD 500 million-worth Eurobonds taken under 7.5% of interest rate in 2008].
Baindurashvili did not elaborate the volume of the second Eurobond emission but economic analysts suppose that most probably, it will not be less than USD 500 million as far as the new loan apparently must cover the old one and extend complete payment by 7-10 years.
According to Shota  Murghulia, economic analyst with the Center for Economic Problems Research (CEPR), emission of the second Eurobonds  is the only way to pay-off the first emission  that should be cleared  by 2013. The thing is that the total volume Georgian state budget has to pay for Eurobonds alone in 2013 makes more than GEL 800 million. Besides the state has other outstanding liabilities to cover in 2013 that put together with Eurobonds exceeds GEL 1 billion. And disbursing such a big chunk of yet meager state budget [it totals about GEL 7 billion this year] on paying off financial liabilities alone within a year seems impossible to the country.
That’s why Murghulia finds reasonable to take new loan this year under lower interest rate to insure smoother payment of all due liabilities till 2013.
Baindurashvili asserts meanwhile that state budget is pretty able to cover the USD 500 million Eurobond obligation even today and new Eurobond is to be taken for raising awareness of the country at international market that can give an impetus to commercial sector of the country that may have better credit access as a result.
“Euro-bonds amount to only 10% of our foreign portfolio and it shall be covered by 2013,” he said. “This increases the annual debt service in regard to budget expenses up to 19%, and in regard to exports – up to 11%. This will only apply if our country chooses not to issue new Euro-bonds; and our strategy is to issue new Euro-bonds, because here we are not talking about budget incomes, but the existence of a benchmark. Our goal is to extend its maturity from 5 to 7 or 10 years, which will help to attract more long-term resources and investments in the commercial sector in the future. Taking this into account, naturally, the country will have absolutely no net expense for covering the Euro-bonds. Even without issuing new Euro-bonds, Georgia is ready, even at this very moment, to completely cover Euro-bonds from the government’s free deposits.”
Murghulia wonders of what free resources Baindurashvili speaks when the state budget has a GEL 500 million deficit this year that means that government has to find either new loans or grants to fill this gap. On the other hand payment of Eurobonds is not built in the state budget and if government really decides to pay it off today it means that no pensions will be delivered in coming months.
Murghulia questions reasonability of a new loan if it is not aimed at coverage the old Eurobonds. He believes that enhancing foreign liabilities [that already makes more than 38% of GDP] with no clear purpose and economic calculations [that the finance minister has not presented as of yet] where the new loan will be invested and what economic benefit will be given is extremely unwise. And argumentation that Georgia may improve its image at international financial market and banks enjoy more credits seems unserious to Murghulia because big foreign debt is no attractive image to investors.
“Nobody provided us with clear calculations what economic benefit we took from the first Eurobond emission that was extremely unreasonable in 2008 when we had a surplus in the state budget and led to burdensome expenses now when we have a deficit. Nobody can say for sure whether  banks really enjoyed better credit access at international market or we had any other benefit thanks to old debt. The fact is that economic growth reduced to 2% in 2008 and slumped by 4% in 2009 and banks faced credit crunch rather than relief,” Murghulia told Georgian Journal.
Levan Surguladze, Head of Caucasus Financial Service, approves governmental initiative to issue Eurobonds to keep a benchmark at international market. 
“USD 500 million is not such a catastrophic sum in fact for Georgian state loan portfolio consists of “easier” long-term loans of international organizations fixing low interest rates and the single difficulty  is the USD 500 million. But the second emission will be much easier than the first one and it definitely gives an impetus to banks,” he explained to GJ.

Print
Other Stories
Who is constructing “Khadori 3” Hydropower Plant in Pankisi Gorge?
Clashes broke out in Pankisi Gorge, Georgia’s northeastern region between special forces and residents
Business Positive – Successful radio program from Radio Positive
Starting point of radio program Business Positive is to meet interesting people, communicate with them and deliver information that is interesting for the audience.
A factory of electric vehicles to be built in Kutaisi
Prime Minister Mamuka Bakhtadze stated that a factory of electric vehicles will be built in Kutaisi at the presentation of the Aigroup business group.
Qvevri-shaped hotel complex to be built in Telavi
A Qvevri-shaped hotel complex is scheduled to be built in the village of Shalauri in Telavi, Kakheti (east part of Georgia).
Georgian designers presented at Fashion World Tokyo 2019
The products of 11 Georgian designers are showcased at Fashion World Tokyo 2019,
Silknet raises $200 million in Eurobond issue
27 March 2019 - JSC Silknet (“Silknet”), one of Georgia’s leading telecommunications operators, has successfully priced a debut $200 million 5-year 11% senior unsecured bonds issue (the “Notes”).
Pistachio trees will be planted in Georgia
Dozens of hectares of Pistachio are planned to be planted in Georgia this year.
Toyota Safety Sense and Hybrid Technology
Toyota Caucasus, has presented two new models the 5th generation RAV4 and the 12th generation Corolla at Rustavi International Motorpark, several days ago.
Bidzina Ivanishvili “became number one oppressor of businesses in Georgia” - ICC Georgia chairman Fady Asly
Mr. Ivanishvili promised the business community to protect them from harassment and pressure, unfortunately his words died with the sunset of that day
The best brands of Belarus will be exhibited on a large-scale exposition in Tbilisi
"The Belarusians like to come to Georgia to relax near the sea in Batumi as well as to stay in sunny Kakhetia."
Don’t treat business like a hooker! - Georgian businessman Vasil Soprpmadze addresses politicians
Businessman Vasil Sopromadze, founder of the company "Fresco", addresses politicians
RAV4 No Compromise and Corolla Set to Impress – Two New Cars Presented by Toyota
Toyota Caucasus, the company constantly aspiring to greatness, has presented two new models the 5th generation RAV4 and the 12th generation Corolla.
Mamuka Khazaradze quits TBC bank, does not sell the TBC Bank share
I made a decision to leave TBC bank where I spent 27 years of my life
10 Reasons to buy an apartment in the suburbs
There is a tendency for Tbilisi dwellers to move from central parts of the capital to the suburbs.
Georgian citizens are granted the right to work in France
The French Embassy in Georgia made remarks on granting Georgian citizens the right to work in France
The New York Times: Bitcoin declines but Georgia still bet on it
The New York Times has recently published an article about reasons, challenges and causes of generating Bitcoin in the former Soviet country Georgia.
EU to allocate € 13 billion for Eastern Partnership countries, including Georgia
The European Union together with the World Bank plans to allocate investment worth € 13 billion for infrastructure projects in the Eastern Partnership countries.
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
25.04.2019
26.04.2019
USD
1
USD
2.6984
2.6984
EUR
1
EUR
3.0246
3.0246
GBP
1
GBP
3.4912
3.4912
RUB
100
RUB
4.2125
4.2125
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6984
EUR
1
EUR
3.0246
GBP
1
GBP
3.4912
RUB
100
RUB
4.2125