Page 40 - GEORptSep19

The positive outlook primarily reflects the agency’s view that Georgia's economic and external performance has the potential to outperform the current forecast over the next 12 months. S&P projects an annual growth rate of around 4% in the medium term. The improved outlook also reflects the country's continued compliance with the conditions of the existing funded IMF arrangement, the agency noted.
S&P said it could revise the outlook back to stable if weaker growth in Georgia's key trading partners, contrary to its expectations, appeared to be undermining the country's medium-term economic prospects and its external position. It could also revise the outlook back to stable or lower the ratings if Georgia's institutional arrangements weakened and led to less predictable policymaking, as well as a damaging of business confidence and growth prospects.
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.
8.5 Fixed income
8.5.1 Fixed income - bond news
Georgia’s largest lender TBC issues $300mn in unsecured bonds
Georgia’s TBC Bank, the largest bank in the country on all key metrics, on June 12 announced that it has successfully priced a debut $300mn, 5-year senior unsecured bonds issue.
Heavily overbooked, the issue was launched with a 5.75% coupon at a 6% yield—which the bank said was the lowest ever yield achieved by a Georgian issuer on the international debt markets.
It is expected that the bonds will be listed on the regulated Euronext Dublin market on or about June 19 with a rating of Ba2 by Moody's and BB- by Fitch. An application may be made to list the bonds on Georgia’s stock exchange as well. If successful, the issue would become Georgia’s first dual-listed international offering of senior unsecured notes.
40 GEORGIA Country Report September 2019 www.intellinews.com