EBRD may issue bonds in manat
By Nigar Orujova
The Eurasian Bank for Reconstruction and Development may issue bonds in manats by late 2015, EBRD President Suma Chakrabarti said at a press conference in Baku on May 8.
This is the second visit of Chakrabarti to Azerbaijan in this position, which, as he said, shows the significance of Azerbaijan for the Bank. During his visit, Chakrabarti met with Azerbaijan’s President Ilham Aliyev.
The head of EBRD went on to add that if bonds are issued, EBRD will become the first international organization to issue bonds in manats.
He added that at a meeting with the leadership of the Central Bank of Azerbaijan on this purpose, the parties also discussed issues relating to the financing of small and medium-sized enterprises, the allocation of syndicated loans, project financing to reduce energy consumption, and the assistance EBRD may provide in case of consolidation of the country’s banks.
The EBRD head said after the devaluation of the Azerbaijani manat in late February, opportunities for local companies to obtain loans in manats should be expanded.
In his turn, EBRD Baku office head Neil McCain said the sale of bonds will be carried out within the country and afterwards entering foreign markets may be considered.
He also noted the bank successfully issued similar bonds in the Georgian lari in 2015.
The CBA set the manat rate at 1.05 against the USD, compared to 0.78 earlier, in February. The move was aimed to strengthen international competitiveness, amid pressure on the country’s finances from falling oil prices, according to the CBA statement.
The EBRD has already allocated 2.33 billion euros to finance 156 projects in various sectors of the economy in Azerbaijan since the beginning of cooperation in September 1992. One of the EBRD’s main tasks is to ensure the stable development of Azerbaijan's non-oil sector by investing in small and medium private enterprises.
Azerbaijan, the largest recipient of the EBRD funds in the Caucasus, is also one of the largest recipients in the CIS and Eastern Europe. Last year, the bank invested 238 million euros in the implementation of 21 projects.
EBRD to allocate loan to Shah Deniz-2
Suma Chakrabarti went on to add that the bank will issue a syndicated loan within the Shah Deniz-2 project. However, the exact volume of the loan and the timeframe is yet unknown.
Neil McCain for his part added that this issue will be discussed this summer at a meeting of the bank’s Board of Directors. “The loan will be allocated after the approval [of the timeframe and volume].”
The reserve of Shah Deniz gas and condensate field is estimated at 1.2 trillion cubic meters of gas. The volume of production at the field last year totalled 9.9 billion cubic meters of gas and 2.3 million metric tons of condensate (18.7 million barrels), compared to 9.8 billion cubic meters of gas and 2.48 million metric tons of condensate (19.6 million barrels) in 2013.
EBRD plans for Azerbaijan
The bank also plans to expand its activity in Azerbaijan, the EBRD head said.
"We exchanged views on the expansion of the EBRD's activities in the country and believe in the priority of realization of many projects in the non-oil sector. I think both sides understand that more money needs to be invested in agriculture sector. We would like to provide support to farmers in all regions of the country. I hope that our delegation here will contribute to the creation of a special mechanism for the financing of agriculture," he said.
Moreover, the bank intends to allocate more funds in the field of renewable energy, as well as considering the possibility of financing projects supporting municipalities.
"The main objective of the implementation of the bank's projects in the country is the diversification of its economy," he stressed.
Neil McCain said the bank is discussing the possibility of acquiring a stake in four Azerbaijani companies.
To date, the bank has a stake in six companies of Azerbaijan, three of which are banks.
"In addition, in the case of consolidation of banks, we are ready to participate in their assets. The issue was also discussed with the head of the Central Bank, Elman Rustamov," he said.
"As you know, the Bank has a stake in three banks: AccessBank, Unibank and DemirBank. At the same time, we lend to six banks. All these nine banks meet the requirements of the CBA of the minimum amount of aggregate capital. They have exemplary financial performance. We will continue to provide support to these banks in the event of future risks due to changes in the exchange rate of the manat," McCain added.
The head of the Baku office noted that the depreciation of the national currency is a normal phenomenon that has occurred in other countries in the region. "I think the banks should be ready for such changes," he summarized.
During the official visit, the EBRD delegation headed by Suma Chakrabarti will meet with Azerbaijani officials and representatives of the business community and civil society.
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Nigar Orujova is AzerNews’s staff journalist, follow her on Twitter: @o_nigar
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