SOCAR may issue bonds in national currency

By Azernews

By Nigar Abbasova

Azerbaijan’s state oil company SOCAR, which has recently announced about issuance of its USD bonds for the domestic market of the country doesn’t exclude the possibility of issuing bonds in the country’s national currency – the manat in the future.

SOCAR President Rovnag Abdullayev told reporters that main objective of the company is to create a stock for the trade of securities in the country.

“We are considering emission of manat bonds, which will have a dollar peg. The project will give an impetus for the development of the securities market in the country.   

He said that dollar bonds enjoy heightened interest of the population, mentioning that a new emission of bonds may be done within a short period of time.  

“The country has no experience in the issuance of bonds, this is the first emission. We are trying to provide the population with the possibility of extra earnings. I believe in the success of this project, and we will possibly realize additional emission of bonds this year. We will examine the issue, all will mainly depend on the demand,” he said.  

SOCAR will issue some 100,000 dollar bonds, while the nominal value of each is $1,000. The annual bond yield is 5 percent, while interest income is not taxable and will be paid quarterly.

One of the main advantages of SOCAR’s bonds is that their annual interest yield is higher than the rates applied in reference to dollar deposits placed in banks, where the annual interest rate on dollar deposits currently stands at 2.5-3 percent.

High interest rate on SOCAR’s bonds has raised concerns over the issue of outflow of foreign currency deposits from banks. Abdullayev, however, said that annual interest yield of new bonds will be set at a level below five percent, as the company has no intention to create problems for the operation of banks, which set low-interest rates on deposits. The volume of new emission has not yet been revealed.  

SOCAR will issue some 100,000 dollar bonds and the nominal value of each bond is $1,000. The annual bond yield is 5 percent, while interest income is not taxable and will be paid quarterly. The sale of bonds will be implemented in Asan services ?1 and ?5. Citizens of the country will be able to receive interest yield in International Bank of Azerbaijan (IBA), Kapital Bank, Rabitabank, Xalq Bank. The bonds will be sold till October 10, 2016.

The company has an experience in issuance of euro bonds for the international market. SOCAR has already implemented three issues of Eurobonds in the international market.

Back in late 2012, SOCAR's head Rovnag Abdullayev voiced plans to issue bonds of the company worth 500 million manats ($299 million) and place them on the Azerbaijani securities market, saying that success of the company’s corporate bonds in foreign markets allowed to plan the issue of bonds in the domestic market.