Azerbaijan to join the regional Eurobond push

By bne IntelliNews March 6, 2014

bne -

Azerbaijan has launched an investor roadshow in preparation for a debut sovereign Eurobond later this year. Falling into line with other country's in the region, Baku hopes to raise $1bn through the 10-year issue.

Officials from Azerbaijan are meeting investors in Europe, the UK and the US this week. According to IFR, the bond is attracting strong interest.

However, the timing of the issue is likely to depend on resolution of the crisis in Ukraine. Azerbaijan's proximity to both Russia and Ukraine, and the potential for the situation to spark instability in the South Caucasus, clearly presents pricing issues for Baku.

In October, Fitch Ratings affirmed Azerbaijan's long-term foreign and local currency IDRs and its senior unsecured bonds at 'BBB-'. The rating agency cited stabilising oil production and a sovereign balance sheet that is "one of the strongest among rated sovereigns". Standard & Poor's affirmed Azerbaijan's ratings at 'BBB-/A-3' with stable outlook in January, saying that the country "maintains strong net general government and external asset positions."

Azerbaijan's largest bank, the International Bank of Azerbaijan (IBA), has indicated it may issue its own $500m Eurobond this year. Chairman Jahangir Hajiyev, said in November that a potential 5-7 year issue is "linked with increase of [IBA's] capital." The bank plans to increase its capital by AZN500m ($460m) within the next four years.

The Azeri issue will see the country join others in the region in raising activity on international markets. Old foe Armenia raised $700m from the sale of its Eurobond debut in September - dubbed a "Kardashian" bond -pricing at 6.25%.

Kazakhstan, anther oil-rich former Soviet country, has also announced plans for a Eurobond this year. Finance Minister Bakhyt Sultanov said Astana hopes to raise $1bn via its first sovereign Eurobond for more than 13 years, after plans to borrow in 2013 were put on hold.

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