The European Bank for Reconstruction and Development (EBRD) has raised AMD 2 billion (equivalent to approximately US$ 5 million) from a new issue of offshore Armenian dram-denominated bonds, providing local currency funds for the EBRD’s own lending to the country’s economy. The transaction will enable the Bank to improve access, through its partner financial institutions, to local currency financing for Armenian micro, small and medium-sized enterprises (MSMEs).
The transaction was structured as a five-year, floating-rate bond maturing in November 2027, with listing in London. The Record Emerging Market Sustainable Finance Fund (Record) is the sole investor in this transaction, which was arranged by HSBC Bank. The semi-annual coupon rate on the EBRD’s dram bond issue was linked to a six-month AMD Treasury Bill (T-Bill) rate. This rate is one of the reference points in the Armenian government bond yield curve published by the Central Bank of Armenia and used by market participants as a benchmark for pricing their financial products.
The Record Emerging Market Sustainable Finance Fund is an Article 8 fund (under European Union Regulation (EU) 2019/2088) that aims to support the development of local-currency markets in low- and middle-income economies together with improved access to long-term, local-currency lending. This investment strategy, according to the fund, represents a significant innovation in currency markets and a commitment to the development of new sustainable investment products for private clients globally, which it expects to have broad and growing appeal for years to come.
The EBRD’s country strategy for Armenia stresses the importance of developing capital markets and promoting local-currency financing. The first loan in dram was signed in March 2010 and in total the EBRD has extended AMD 150 billion (approximately €384 million) of loans that can or could have been drawn down in dram. The Bank’s most recent local-currency-financed project in Armenia is worth the equivalent of US$ 14 million, aimed at supporting local MSMEs.
The EBRD is the leading institutional investor in Armenia. Since it began operations there, the Bank has invested more than €2 billion in 204 projects in the country’s financial, corporate, infrastructure and energy sectors, with over 90 per cent of those investments in the private sector.