Page 51 - GEORptApr21

8.5 Fixed income
8.5.1 Fixed income - bond news
Georgia to refinance
$500mn of eurobond maturing April 12
Georgian oil company GOGC refinances $250mn eurobonds with EBRD loan
Galt & Taggart places fifth $2mn bond for Georgian
The government of Georgia has selected three international investment banks - JP Morgan, Goldman Sachs and ICBC - to issue $500mn of eurobonds with the aim of financing an issue with the same size that is set to mature on April 12.
In addition, in order to promote the development of the local market, local banks Galt & Taggart and TBC Capital were selected as co-participants. However, the issue will not necessarily be placed before April 12 because the government has a significant buffer and can service the maturing debt from its own resources, explained Mari Chachanidze, managing director of TBC Capital, in an interview with bm.ge.
The refinancing is a good opportunity for Georgia to remain active on the credit market, Chachanidze added.
"It is not just a way to raise money, it is a way to stay closer to foreign investment banks and international investors," she said.
"With the release of eurobonds, we are entering a larger and more diversified market of investors, to whom we can offer Georgian securities and who can become more interested in 'buying' Georgia or buying Georgian risk."
Armenia, which was able to issue securities with an unprecedentedly low coupon, despite its sovereign rating being two notches below Georgia’s, has served as encouragement to Tbilisi to tap the market as well, the TBC Bank executive added.
The European Bank for Reconstruction and Development (EBRD) is to extend a €217mn senior unsecured loan to state-owned Georgian Oil and Gas Corporation (GOGC) for the refinancing of a $250mn eurobond that matures in April 2021, the EBRD said in a statement.
The funding agreement was made in response to the economic shock caused by the coronavirus (COVID-19) pandemic.
In addition, the financial package is to support planned reforms at the state company, including the development of a natural gas exchange.
The loan will improve the liquidity of GOGC, which has been damaged by the economic impact of the COVID-19 crisis, and will alleviate difficulties in tapping the capital market, the EBRD said.
The corporation is one of the largest state-owned companies.Its revenue increased by 37% to Georgian lari (GEL) 880.6mn ($330mn) in 2019. Net profit fell 22.8% to GEL121.4mn in the year. Despite declining profits, GOGC was still one of the most profitable state-owned enterprises in Georgia in 2019.
The total assets of GOGC include main gas pipelines, as well as the combined cycle power plants Gardabani 1 and Gardabani 2—the latter of which was officially put into operation at the end of 2019. The two power plants account for 20% of the country's electricity consumption and also provide balancing system services for intermittent production at hydropower plants.
It was in 2012 that GOGC issued a $250mn eurobond and listed it on the London Stock Exchange. In April 2016, it refinanced the eurobond, with a deadline for repayment of April 26, 2021.
Galt & Taggart has announced that it secured the successful placement of another $2mn of 2-year bonds of Georgian Leasing Company to be listed on the local stock exchange.
51 GEORGIA Country Report April 2021 www.intellinews.com