Rovnag Abdullayev: SOCAR intends to diversify its financing channels

By Azernews

By Nigar Abbasova

Azerbaijan's state energy giant SOCAR held a presentation on the issuance of bonds for the domestic market of the country, on September 16.

SOCAR’s President Rovnag Abdullayev, addressing the event said that the company is pursuing a new strategy on the strengthening of its positions at the international level and seeks to diversify its financing channels.

“Eurobonds have been successfully issued on the domestic market. This is a very important step for diversifying financing channels and creating investment opportunities for the population,” he said.

The company will issue USD bonds for Azerbaijani citizens starting September 20. The nominal value of each bond is $1,000, while the total volume of emission is $100 million. The annual bond yield is 5 percent, while interest income is not taxable and will be paid quarterly. The bonds will be sold till October 10, 2016.

Abdullayev said that obligations may be obtained only by Azerbaijani citizens and local companies, mentioning that SOCAR guarantees the liquidity of the issued securities and the possibility of selling them at any time. He also pointed out that foreign individuals and legal entities have a right to buy bonds from their owners on the secondary market.

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. AzFinance, InvestAZ, PASHA Kapital and PSG Kapital will act as market makers (dealer firms that assume the risk of holding a certain number of shares of a particular security in order to facilitate its trading).

Abdullayev emphasized that issuance of bonds will provide for new financial mechanisms for the economy of the country. He said that that issuing of SOCAR bonds in the country won’t lead to an increase in the volume of funds attracted from outside, as the funds from selling these securities will be used for diversification of the company’s financial portfolio, adding that part of the funds attracted after the issuance of dollar bonds will be used to repay part of the external debt of the company.

Azerbaijani presidential aide on economic reforms Natig Amirov, in turn, said that the government of Azerbaijan is considering the issue of exempting interest income of bonds from taxes for an open-ended period (the interest income is exempt from taxation in the country for a period of three years starting from February 1, 2016). He also said that SOCAR is ready to place its shares on the stock 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.