Azerbaijan plans bond sale in 2016

/By AzerNews/

By Gulgiz Dadashova

Azerbaijan will offer no less than 500 milion euros of bonds, Finance Minister Samir Sharifov said at a briefing on April 20, Trend reports.

The government revised plan to issue debt in 2015 came in view of the current economic situation as the market remains unsuitable.

"Most likely, we will issue eurobonds in 2016, but there is no set date yet. It really depends on the needs of the market and how economic factors will fair," he explained.

“The size of a planned bond sale in euros won’t depend on us alone. It will also depend on the market demand. It won’t be less than 500 million euros,” the minister added.

Azerbaijan sold $1.25 billion debut bonds in March 2014 with a repayment term of 10 years, with a yield of five percent.

The investment banks "Barclays", "Deutsche Bank AG London" and "Citigroup Global Markets Limited" were entitled for realization of the first issue of bonds.

Insurance

Azerbaijan’s finance ministry is studying the possibility of increasing tariffs on compulsory insurance.

This mainly affects a compulsory insurance for motor vehicle owners' civil liability, Sharifov said.

"We have discussed the possibility of increasing premiums for compulsory insurance, but no specific decision has been made yet. In this regard, we are receiving appeals from insurance companies, who complain that due to changes in exchange rate of the manat [from February 21, 2015] their costs increased. We have studied this issue and will soon take a decision,” he noted.

Sharifov added that the ministry also received many complaints from consumers of insurance services.

"We have created a special commission to review such complaints. The main reason is that insurance companies use the services of insurance agents in the sale of insurance policies, for whom the most important thing remains to sell policies. Insurance agents are not interested in what happens next, resulting in a headache for insurance companies. Because of the lack of communication with clients, insurance companies today are faced with problems," he said.

Sharifov added that the main problem of insurers is that they do not carry out the necessary work to educate their customers.

He emphasized that consumers should be aware that insurance covers only part of their risks in insurance cases and no one can offer absolute guarantee against risks.

To avoid further problems associated with a lack of information in this area, the Ministry together with the State Insurance Supervision Service plans to prepare special training shows.

Currently, 27 insurance companies operate in the country.

Mortgage

Increasing mortgage lending in the country has been one of the steps aimed at addressing the shortage of money in this market, Sharifov said, adding that the ministry will support such measures.

"We can allow an increase in the amount of mortgage loans and the corresponding work is underway. I believe that the central bank will offer additional funds to strengthen the market and the government will provide additional state guarantees if necessary,” he said.

The minister noted the changes in mortgage lending will increase market's liquidity and support local producers of building materials.

Loans worth 14 million manat were issued in January-February 2015 through the Azerbaijan Mortgage Fund (AMF), which is 2.19 percent more than in 2014. Roughly 16,452 persons received mortgage loans so far and the total amount of funding exceeds 660.28 million manat.