Armenia’s Risk Premium Falls to Historic Low, Finance Minister Says

YEREVAN — Armenia’s public debt declined by 3.5 percent in dram terms during the first half of the year, reaching 5.1 trillion drams as of June 30, Finance Minister Vahe Hovhannisyan said on September 9 while presenting the state budget execution report to the National Assembly’s Standing Committee on Financial-Credit and Budgetary Affairs.

The decline from 5.3 trillion drams at the end of December was attributed to stronger-than-expected revenue growth and exchange-rate fluctuations. Public debt also decreased slightly in U.S. dollar terms, falling to $13.9 billion.

Hovhannisyan said the government had deliberately slowed new borrowing because of favorable budget conditions.

Demand for government bonds in the domestic market exceeded the amount offered by 2.8 times, compared with approximately twice the amount offered during the same period last year. At the same time, the share of non-residents in Armenia’s dram-denominated debt portfolio increased by 3.5 percentage points to 11 percent.

According to the minister, the figures demonstrate growing interest in Armenian dram-denominated bonds among international institutional investors.

Conditions for servicing Armenia’s external debt have also improved. Interest payments on foreign loans totaled $75.2 million during the first half of the year, down from $81.5 million during the same period last year.

Meanwhile, yields on Armenia’s Eurobonds have fallen by more than one percentage point, indicating a decline in the country’s perceived risk.

“I am pleased to say that we can now state that our risk premiums are at historically low levels,” Hovhannisyan said.

He added that Eurobonds maturing in 2026, 2031 and 2035 currently carry yields of approximately 5.4 percent, 5.7 percent and 6.1 percent, respectively.