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Azerbaijan sees surging demand for securities market despite pandemic

Finance Materials 17 March 2021 11:14 (UTC +04:00)
Azerbaijan sees surging demand for securities market despite pandemic

BAKU, Azerbaijan, March 17

By Zeyni Jafarov – Trend:

By late 2020, the total trade turnover of the securities market in Azerbaijan amounted to 14.1 billion manat ($8.3 billion) amid the negative impact of the coronavirus pandemic on the country’s economy, Trend reports citing the Central Bank of Azerbaijan (CBA).

“A significant increase in transactions was observed in the secondary market and on repo transactions. In total, investment securities worth 12.2 billion manat ($7.17 billion) were registered last year and 11 issue prospectuses were approved,” said the CBA report.

The CBA stated that the volume of transactions last year in the shared segment of the corporate securities market increased by 37 percent and amounted to 583 million manat ($342.9 million), and the volume of transactions on corporate bonds - 2.77 billion manat ($1.62 billion).

“The volume of transactions in the market for government securities amounted to 8.6 billion manat ($5.05 billion). Some 46 auctions were held at the Baku Stock Exchange to place notes of the Central Bank, and the volume of transactions in the secondary market increased by 30 percent - up to 491 million manat ($288 million),” said the report.

“During the reporting year, the total volume of transactions with government bonds increased by 42 percent and reached 1.7 billion manat ($1 billion). Some 36 auctions and one private placement were held at the Stock Exchange for the placement of government bonds, as a result of which the volume of primary market transactions increased by 77 percent compared to the previous year and amounted to 1.2 billion manat ($705 million),” the report reads.

“The secondary market for government bonds amounted to 521 million manat ($306.4 million). At the same time, for the first time in 2020, in accordance with progressive international practice, an opportunity was created to increase the supply by the issuer in the event that demand exceeded supply during an auction of government bonds. This increased the flexibility to meet the demand for government bonds, as well as broadened the scope for financing from the market,” said the bank.

“During 2020, the volume of repo transactions increased by 92 percent compared to 2019- up to 2.15 billion manat, while 90 percent of repo transactions were carried out with government bonds. For the first time in 2020, repo transactions with shares of 500,000 manat were recorded,” the report reads.

“Last year, state registration of investment securities worth 12.2 billion manat was carried out. Of these, 1.29 billion manat or $758.8 million (11 percent) fell on the issue of 41 corporate bonds, 766 million manat (6 percent) - on the issue of 119 shares and 10.1 billion manat or $5.94 billion (83 percent) - on the issue of government securities,” said the report.

Of government securities, 7.19 billion manat ($4.23 billion) fell on the issue of short-term notes of the CBA, and 2.92 billion manat ($1.71 billion) - on the issue of government bonds.

Earlier, the CBA prepared instructions for issuers, which set out the procedures for issuing shares and bonds in a single document, describes in detail the documentation required for state registration and withdrawal of securities from circulation, as well as the requirements established by law during their preparation.

(1 USD = 1.7 manat on March 17

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