November 9, 2019 - 10:39 AMT
Reuters: Armenia economic reforms appeal to yield-hungry investors

When Armenia opened books for a Eurobond two months ago, demand was four times bigger than the offering, highlighting the new-found appeal of the tiny ex-Soviet republic among investors hungry for yield in a world of negative interest rates, Reuters says in a fresh article.

After peaceful protests last year installed a reform-minded government, the piece says, Armenia's economy is growing faster than oil-rich Azerbaijan next door, bolstering investors' willingness to lend to the impoverished, landlocked nation of three million people.

"Yerevan sold $500 million of 10-year Eurobonds in September, drawing demand of more than $2 billion in its third foray into international markets. It also bought back part of its inaugural 2013 dollar-bond 042207AA8= due in 2020 in the September sale," the publication says.

"Armenia's 2025 bonds are yielding 3.9% - a touch above Azerbaijan's and Uzbekistan's 2024 bonds at 3.3% and 3.5% respectively. Returns on Armenia's bonds in the JPMorgan emerging bonds benchmark has risen nearly 14% year-to-date compared to a 9.4% rise for Georgia."

Economic growth in Armenia picked up to 6.5% in year-on-year terms in the second quarter of 2019. This week the central bank raised its GDP growth forecast for this year to 6.9-7.1% from 4.9% due to the strength of both manufacturing and services.

The economy will get a further boost from tax reforms due in two months, Finance Minister Atom Janjughazyan has said.

Next year Armenia will cut corporate tax to 18% from 20%, introduce a flat-rate income tax of 23% and will hike tobacco and alcohol duties. Private firms with a turnover of less than $50,000 a year will benefit from zero taxes.

Global ratings agency Moody's raised Armenia's sovereign rating to Ba3 from B1 in August, but said it was important to maintain the pace of reforms.