International development bank issues inaugural Georgian Lari bond

A historic milestone in Georgia’s finance sector has been reached today as an international development bank announced it had issued a significant financial bond to help build the Georgian market economy.

The European Bank for Reconstruction and Development (EBRD) issued a 50 million Lari (€20.7 million) bond to strengthen Georgia’s capital markets and boost lending to local currency. The bond is EBRD’s first-ever issuance. 

It is also the first placement by an international financial institution and also represents the first floating rate note on the domestic market in Georgian Lari.  

The two-year bond, announced today, was jointly led-managed and underwritten by two leading local financial institutions - JSC BG Capital, the wholly-owned brokerage subsidiary of Bank of Georgia, and TBC Bank.   

A coupon on the EBRD’s Lari bond will offer a three-month flat rate on certificates of deposit issued by the National Bank of Georgia (NBG). 

The bonds are eligible for sale and repurchase through the NBG. 

NBG’s deputy CEO of Finance Nikoloz Gamkrelidze believed the bonds would be "a great instrument” in preserving the short-term liquidity of the bank.   "We’re eager to sell the bonds as well as to consolidate them onto the banks' balance sheet,” he said. 

 "The Bank of Georgia believes local banks and international companies will express interest in purchasing the bonds,” Gamkrelidze said following the issuing of the bonds at the NBG head-office.

 EBRD director for the Caucasus, Moldova and Belarus, Bruno Balvanera, said the organisation aimed to encourage borrowing in local currency and to develop and strengthen local capital markets and increase the supply of locally-sourced finance.  

"Bonds bring a new instrument for investors and at the same time allow the EBRD to diversify its source of Lari and continue lending to companies in need of long-term financing in the local currency,” he said.

NBG president Giorgi Kadagidze was confident bond issuance by the EBRD would pave the way for such issuances by other international financial institutions and would further the development of Georgian capital markets. 

"With developed local bond and currency markets encourage improved efficiency of financial intermediation, diversification and reduction of the currency risks in the banking sector. These lessen important risks connected with exchange rates and strengthen the stability of local financial systems in the Georgian economy as a whole,” he said.

To date, the EBRD has invested a total of €1.86 billion (4.48GEL) for 167 projects in various sectors of the Georgian economy. Furthermore, it has mobilized an additional €3 billion (7.23 GEL) for these ventures from other sources of financing.