Page 51 - GEORptSep21

Fitch affirms Georgia’s BB/negative rating, expects more structural reforms
“While we think the opposition's demand for fresh elections is unlikely to be met, there is room for other political concessions that could end the deadlock. Former prime minister Giorgi Gakharia's recent resignation over the sentencing of an opposition leader further clouds near-term policy predictability, though the government's stated macroeconomic agenda remains unchanged,” the rating agency noted on the political side.
The move takes into account the effects of the corona crisis and follows a similar step taken by Fitch last April.
The rating agency affirmed the country’s long- and short-term foreign and local currency sovereign credit ratings at BB, as well as the negative outlook.
Georgia's governance and ease of doing business indicators outperformed the median percentile of its BB peers, the rating agency argued, while the country's commitment to the current IMF EFF programme helped maintain a positive structural reform agenda.
Fitch expected Georgia to agree a successor deal with the Fund when the EFF expires in April.
The main downside risks to Fitch's baseline related to uncertainties attached to the evolution of the pandemic and the efficacy of the vaccination rollout, the rating agency said.
Georgia's general government debt is estimated by Fitch to have increased by 20pp in 2020 to 60.4% of GDP, slightly above the median debt ratio of 'BB' peers (59.9% of GDP). Fitch forecast debt to stay around this level in 2021, before declining to 56.5% in 2022.
The economic recovery and commitment by the government to return to its fiscal rule by reaching a deficit below 3.0% of GDP by 2024, will support medium-term debt reduction.
Fitch forecast Georgia's CAD will widen to 12.5% of GDP in 2021, before narrowing to 7.9% in 2022. A domestic-driven recovery and a weak outlook for tourism will mean a higher pace of growth in imports than exports, it added.
8.5 Fixed income
8.5.1 Fixed income - bond news
Galt & Taggart places Georgian Leasing Company bonds worth $12mn and $3mn
Investment bank Galt & Taggart has successfully placed 2-year bonds of Georgian Leasing Company worth $12mn, it was reported on July 14. Additionally, for the first time, EUR-denominated bonds of €3mn with a 2-year maturity were placed in Georgia.
These are the 6th and 7th issuances carried out by Georgian Leasing Company. The transactions amid pandemic uncertainties prove that Georgian Leasing Company is a stable company and foreign investors trust it, according to Galt & Taggart.
The annual fixed rate on the USD-denominated bonds is 5.75%, while the annual fixed interest rate for the EUR-denominated bonds is 4.75%. Both securities will mature in two years, on July 12, 2023. Noteworthy was that investor demand exceeded the issuance volume. Both placements were
51 GEORGIA Country Report September 2021 www.intellinews.com