Armenia Issues New Eurobond Worth $750 Million

YEREVAN — Central Bank Governor Martin Galstyan confirmed on Tuesday reports that Armenia has issued its fourth Eurobond worth $750 million to manage its increased public debt and budget deficit.

Galstyan said that the dollar-denominated bonds, repayable in 10 years at an annual yield of almost 3.9 percent, attracted strong interest from foreign investors.
“Never before has there been so much demand for bonds issued by Armenia,” he told reporters. “This has to do with a number of factors. International financial institutions and investors have accumulated large amounts of cash, and they are looking to see where to invest them.”

The Armenian government has not yet commented on the latest Eurobond issue. It is not clear whether it plans to use the proceeds to fully or partly buy back $500 million in similar bonds sold at a 4.2 percent yield in September 2019.

The government needs cash to finance its 2021 budget deficit projected at 341 billion drams ($658 million) or 5.3 percent of GDP. Under its budget bill approved by the parliament in December, 60 percent of the deficit is to be covered from external resources.

The government already resorted to additional external borrowing last year to make up for a significant shortfall in its tax revenues resulting from an economic recession caused by the coronavirus pandemic. As a result, Armenia’s public debt rose by $647 million, to almost $8 billion, in the course of 2020. The debt is projected to pass the $9 billion mark this year.

According to the latest Central Bank estimates cited by Galstyan, the Armenian economy contracted by 7.8 percent last year but should grow by about 2 percent in 2021. The government expects slightly faster growth.