Baku, Azerbaijan, February 22
By Fakhri Vakilov - Trend:
Fitch Ratings assigned the expected “BB-“ rating to the Eurobonds issues of Uzbekistan, meaning risky financial liabilities, Trend reports with reference to the Fitch press release.
"The net proceeds from the bonds will be used by the issuer for general budgetary purposes, including infrastructure projects," the rating agency said in a press release.
The “BB” level refers to the speculative, not investment class (with a high and sufficient level of creditworthiness from AAA to BBB). The next in descending order in this scale is Level B (a significantly insufficient level of solvency). Economists believe that this is not bad for Uzbekistan. This is less than Kazakhstan (BBB), but more than Armenia (B +).
The bonds for the amount $ 500 million at a rate of 4.750 percent and with maturity in 2024 and for the amount of $ 500 million at a rate of 5.375 percent and with maturity in 2029 were valued by rating agency. The preliminary ratings of not yet issued bonds, promulgated in December 2018 were the same.
The ratings are at the same level as the preliminary ratings and with the long-term issuer default rating of Uzbekistan in foreign currency, which Fitch assigned at “BB-” with a “Stable” forecast on December 20.
The demand for the first Eurobonds of Uzbekistan exceeded $8.5 billion, while their actual volume was $1 billion. The country has placed five-year and ten-year Eurobonds in two tranches of $500 million. Moreover, the heightened interest from investors allowed to revise interest rates on yield, reducing rates. Most of the Uzbek Eurobonds on the London Stock Exchange were purchased by investors from the UK.
Eurobonds are international debt obligations issued by borrowers (companies or the state) when they receive a long-term loan on the European financial market in any euro currency. Foreigners who have bought them receive fixed payments, and at the end of the term - the principal amount of the loan.
The issue of Eurobonds became possible after receiving the rating from the Big Three agencies - the three most authoritative rating agencies of the world that first paid attention to Uzbekistan. For the first time, the international rating agency Moody’s assigned Uzbekistan a long-term sovereign rating (level B1), meaning that the country is vulnerable, but can fulfill its financial obligations. In comparison with the level of Moody’s the Fitch’s “BB-“ it is a slightly higher position.
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