Baku, Azerbaijan, Apr. 27
By Fakhri Vakilov – Trend:
Over the past two months, prices for international bonds of Uzbekistan in the secondary market were stable and varied in accordance with general trends, under the influence of global economic processes, macroeconomic changes and expectations, Trend reports via Uzbek media.
Uzbekistan placed a primary issue of international bonds for a period of 5 and 10 years with a total value of $ 1 billion in the global financial markets on February 13, 2019.
Price fluctuations for 5-year international bonds to their nominal value ranged from 99,200 percent to 100,950 percent (with a yield from 4.53 percent to 4.933 percent), including 100,333 percent as of April 19 (yield was 4,670 percent).
Price fluctuations on 10-year international bonds to their nominal value ranged from 98,000 percent to 100,523 percent (5,306 percent - 5,640 percent respectively), including April 19, 100,160 percent (yield was 5,335 percent).
For reference: the price of international bonds is inversely proportional to the yield on them. Interest rate yield decreases when the price rises.
The following factors influenced the price change:
- expectations and decisions on the financial policy of the US Federal Reserve and the Central Bank of the European Union;
- placement of sovereign and corporate international bonds by developing countries on world financial markets;
- Brexit, changes in trade relations between China and the United States of America, as well as other global economic trends.
The dynamics of prices for Uzbek Eurobonds over the past two months indicates that they correspond to the general situation in the capital markets.
In other words, during the initial offering, they were not significantly underestimated or overestimated compared to the fair market value.
The fact that the price changed within the general fluctuations in the market and maintained relative stability with respect to the nominal value of the bonds means that international investors have no significant risk or negative expectations regarding these bonds.
Eurobonds prices serve as barometers for the macroeconomic situation and expectations in the country.
Therefore, changes in cost are also associated with systemic reforms and a cautious macroeconomic policy of Uzbekistan, as well as with ensuring transparency.
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