Page 50 - GEORptMay21

Fitch affirms Georgia’s BB/negative rating, expects more structural reforms
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
Georgia completes issuance of $500mn eurobond with 2.75% coupon
The Ministry of Finance of Georgia recently successfully completed the issuance of 5-year eurobonds worth $500mn with a 2.75% coupon, Minister of Finance Lasha Khutsishvili has announced on his Facebook page.
In a note, Russian bank VTB said it concluded that “the fair yield level for the new 5-year Georgian bond is in the 2.8% area.”
Khutsishvili thanked the international and local investment banks involved in the issuance.
"I would like to thank all the international investment banks (JP Morgan, Goldman Sachs, ICBC Standard) and local investment banks (TBC Capital and Galt & Taggart) involved in the transaction, thev've made a significant contribution to the successful implementation of this stage of the transaction. I will talk to the media about this topic in detail tomorrow," the finance minister wrote on April 15.
The new $500mn of foreign debt will refinance eurobonds issued in 2011. The deadline to repay the principal, namely $500mn, came on April 12. According to the finance ministry, Georgia repaid this obligation from its own funds last week.
50 GEORGIA Country Report May 2021 www.intellinews.com