By Leman Mammadova
The Black Sea Trade and Development Bank (BSTDB) issued the first tranche of Azerbaijani manat bonds on August 1, which was directed to the development of entrepreneurship in the country.
The Bank has recently issued bonds worth 10 million manats ($5.88 million). The total amount of manat bonds, which the BSTDB plans to issue, equals 50 million manats ($29.42 million) and will be allocated in tranches during the year.
If there is a possibility of using the national currency to finance a project in Azerbaijan, BSTDB can further issue manat bonds, the Bank's President Dmitry Pankin told Trend.
In his words, the main question is to find interesting projects to finance in the country. “If we have projects, we will need to solve the issue related to the sources of financing.”
“To date, we have mainly used dollars and euros to finance projects. Presently, we see that there is an opportunity to attract money on the local market and this is a new situation for us,” Pankin said.
He stressed that the Bank will firstly select projects on which it will work and then look at the possibility of using the national currency to finance them. “If it is possible, we will continue to issue bonds in Azerbaijani manats.”
Referring to the demand for BSTDB’s manat bonds, he noted that expectations regarding these bonds were not so high, thus, such a result is surprising. “We saw that there is a demand and there is an interest in the market.”
Pankin added that the important point is that these bonds can be used for refinancing through the Central Bank of Azerbaijan, which significantly supported the demand.
BSTDB is the first international financial institution to issue bonds in Azerbaijani manats. Lending in national currencies appeared after the crisis of 2007-2008, when the monetary units of emerging markets fell sharply. Thus, it became too risky to take loans in dollars and to receive revenue in own currency.
The Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD) are also interested in issuing and placing bonds in Azerbaijani manats.
BSTDB supports economic development and regional cooperation, participates in granting loans for projects in the public and private sectors of member countries, opening credit lines, investing in and granting guarantees and trade financing.
The Bank was founded by Azerbaijan, Albania, Bulgaria, Georgia, Greece, Moldova, Armenia, Romania, Turkey, Ukraine and Russia in 1999.
At present, the authorized capital of the Bank is 3.45 billion euros and the share capital is 2.3 billion euros. Azerbaijan has the 5 percent share capital and is the seventh largest shareholder of the 11 member countries.
So far, the total number of Bank's operations in Azerbaijan is 39 with the financing in the amount of about 366 million euros.
The current portfolio of the Bank on projects in Azerbaijan is estimated at 53.867 million euros as of the end of 2018.
Earlier, Pankin noted that BSTDB may allocate about 80 million euros for projects in Azerbaijan in 2019. This will mainly be the financing of small and medium-sized enterprises (SMEs).
BSTDB has prepared the first four-year draft strategy for cooperation with Azerbaijan. The negotiations will continue in August and September.
Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888
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