Page 35 - GEORptMay19.pdf

Conversely, S&P could raise the ratings if Georgia's economic performance proved stronger than present expectations (4% GDP growth this year and 3.5% in 2020). The agency could also raise the ratings if Georgia's external position strengthened, for example, as a result of stronger export performance and higher foreign exchange reserves at the central bank, the National Bank of Georgia (NBG). At the same time, the agency expects the public finances to remain controlled.
S&P said it believed that Georgia's economy would continue to grow at the comparatively high pace of 4% annually over the medium term. As in the past, it expected this rate to be higher than those of other countries in its region.
In the view of the rating agency, the floating exchange rate regime that Georgian authorities have maintained for many years remains particularly important. Against a weaker external environment, the exchange rate has in the past adjusted promptly, helping to avoid any abrupt one-off swings. Among other things, this has preserved the stability of the financial system a nd allowed Georgia to avoid the credit crunch that hit some other countries in its region in recent years, aggravating other economic problems.
Meanwhile, Fitch Ratings upgraded Georgia’s long-term foreign currency rating to BB from BB- with a stable outlook in February.
8.5 Fixed income
8.5.1 Fixed income - bond news
Georgia’s Silknet raises $200mn with eurobond issue
Anaklia deep sea port consortium in
Silknet, Georgia’s leading telecommunications operator, on March 27 announced that it has successfully raised $200mn from a 5-year, senior unsecured eurobond issue priced at 11%.
The subsidiary of Silk Road Group is the largest telco in the entire South Caucasus region.
“Investors taking advantage of this issuance will benefit from unrivalled exposure to Georgia, the former CIS's most promising success story for its entrepreneurial business environment,” said David Mamulaishvili, Silknet’s CEO.
Silknet is wholly-owned by Rhinestream Holdings Limited, an entity incorporated in Malta. It is ultimately controlled by Giorgi Ramishvili, the founder of Silk Road Group.
Last March, Silknet paid $152mn for 100% in Georgia’s largest mobile operator Geocell , which has a 35% market share. Silknet at that point said at that time that it held 41% of Georgia’s fixed internet segment, 30% of the broadcast transit (pay TV) segment and 48% of the fixed telecoms segment.
The $200mn bond was subscribed to by investors from a wide range of geographies. The paper is expected to be given a rating of B1 by Moody’s and B+ by Fitch, in line with Silknet’s long-term issuer credit rating.
The bond is set to be listed on the Global Exchange Market of Euronext Dublin. JPMorgan, UBS and TBC Capital were joint lead managers. Dentons UK and Middle East and Dentons Georgia were legal advisors to Silknet, while Latham & Watkins and BGI Legal were acting as legal advisors to the joint lead managers.
Anaklia Development Consortium (ADC) intends to issue shares in the planned Anaklia deep sea port project in Georgia. It has addressed the
35 GEORGIA Country Report May 2019 www.intellinews.com