TODAY.AZ / Business

Demand for SOCAR bonds increases

20 January 2017 [12:37] - TODAY.AZ

By Azernews


By Nigar Abbasova

Demand for USD bonds of Azerbaijan’s state energy major SOCAR has considerably increased on the secondary market following the first payment of dividends to its owners.

Analyst of Kapital Management investment company Jafar Ibrahimli said that prior to the launch of the payment process investors preferred to take a wait-and-see approach.  

"People wanted to know how the obligations on the bonds would be fulfilled, while potential investors were interested in whether interest payments would be made in a timely and full manner,” he said.

Jafarli noted that the fulfillment of all obligations by the issuer will increase attractiveness of the bonds for potential investors.

“For now, there is no rival for SOCAR bonds in the securities market in terms of its yield and other parameters. In early 2016, the Finance Ministry implemented certain number of emissions of state short-term dollar bonds with the annual interest rate standing at 3.5 percent, but the process was further halted. The placement of foreign currency (USD) in banks may bring 1-3% a year to the investor,” he clarified.

The company issued some 100,000 USD  bonds with nominal value of each $1,000 in September 2016, while the annual bond yield is 5 percent and interest income is not taxable. The sale of bonds  on the secondary market was launched on October 18.

Operations on the secondary market provided foreign individuals and legal entities with a right to buy bonds from their owners, as only Azerbaijani citizens and local companies had a right to obtain bonds on the primary market.  The highest price for each bond in the secondary market was fixed at the level of $1,024, while a bottom-low figure stood at $1,000.5.

The first interest payment was carried out on January 17, 2017, while owners received dividends worth 1.25 million manats (over $ 677,131).   The interest on bonds is being paid once a quarter. Next payments are scheduled for April 17, June 17 and October 17.

URL: http://www.today.az/news/business/157890.html

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