EBRD: Bond in Armenian Dram

The European Bank for Reconstruction and Development (EBRD) has issued its first-ever bond in Armenian Dram (AMD), helping to drive forward the development of the local capital market and providing funds for the EBRD’s own lending to the Armenian economy in local currency.

The one-year bonds for a total of AMD 2 billion (approximately USD $5 million) were placed via an auction on the NASDAQ OMX Armenia exchange in Yerevan on 31 January, the EBRD said in a release.

This was the first publicly-auctioned issue by either a foreign borrower or an international financial institution on NASDAQ OMX and it was also the first floating rate note to be issued on the local market.

- This is a very significant step for the Armenian capital market and opens the way for further capital raising in Armenia by those seeking to on-lend AMD to the real economy, thereby ensuring a better fit for borrowers who want to avoid foreign currency risk - said Mark Davis, Head of the EBRD Yerevan Office.

This issue is the latest milestone in the EBRD’s Local Currency and Capital Markets Development Initiative that was launched in May 2010 in the wake of the global economic crisis to tackle the problems of excessive reliance on foreign capital and foreign exchange borrowing in emerging economies.

The EBRD made its first local currency loan, in Hungarian Forint, in 1994.

The EBRD’s issuance in Dram supports the Armenian authorities’ programme of reforms aimed at reducing dollarisation in the economy and stimulating locally-generated savings.