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EBRD initiates first-ever Eurobond issued in Georgian local currency

By Loretta  Martikian

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EBRD initiates first-ever Eurobond issued in Georgian local currency

The European Bank for Reconstruction and Development (EBRD) has marked a historic milestone by issuing its first-ever Eurobond both denominated and settled in Georgian lari (GEL).

This development has been made possible by a recent establishment of a link between Clearstream and the Georgian domestic market which not only allows GEL to become a settlement currency in the international central securities depository, but also should encourage more international investment in the domestic market.

The 5-year bond totalling GEL 120 million (€46.7 million equivalent) was lead-managed and underwritten by JSC TBC Bank. The coupon on the EBRD’s inaugural GEL-settled Eurobond is linked to the three-month rate on certificates of deposit (CDs) issued by the National Bank of Georgia (NBG). The EBRD will apply for the bonds to be listed on the London Stock Exchange, following which an application will be made to the NBG for the Eurobond to be eligible for sale and repurchase operations carried out by the NBG.

The EBRD has played a leading role in the development of the local currency and capital markets in Georgia, working with the Georgian government, the NBG and local financial institutions over many years, including throughout the recent global economic crisis, both to encourage borrowing in local currency and to develop and strengthen local capital markets.

Archil Mestvirishvili, Vice Governor of the NBG commented: “The NBG actively supports the issuance of GEL-denominated bonds by IFIs which is of great importance for Georgian capital market development. It is notable that the EBRD was the first IFI to issue GEL-denominated bonds in the local market in 2014, and now the EBRD again pioneers issuance of Eurobonds in Georgian lari. We hope that increased availability of GEL-denominated AAA-rated bonds will increase the attractiveness of the Georgian capital markets for local and foreign investors alike.”

Vakhtang Butskhrikidze, CEO of JSC TBC Bank, remarked: “We are delighted to have completed another successful transaction with the EBRD. Issuance of GEL-denominated Eurobonds under the EBRD’s Global Medium Term Note (GMTN) Programme that will be listed on the London Stock Exchange is an important achievement for the Georgian financial sector that will further support the liquidity of the local currency and attract international investors to the domestic market.”

This transaction is in line with the EBRD’s strategy in Georgia to deepen financial intermediation and develop local currency and capital markets to enable the local private sector access to finance. To date, the EBRD has invested a total of €3.1 billion in 205 projects in various sectors of the Georgian economy. Its first loan in Georgian lari was signed in March 2010.

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