The authors mention the Pashinyan Administration’s reform plan aiming for strengthening institutions and the rule of law, eradicating corruption and improving the business climate.
“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”, the article says.
Reuters’ Nvard Hovhannisyan, Margarita Antidze and Karin Strohecker noted that after Prime Minister Nikol Pashinyan’s government took office Armenia’s economy is growing faster than “oil-rich Azerbaijan next door, bolstering investors' willingness to lend” to Armenia.
Reuters mentioned that the Government of Armenia plans to increase the share of investment to GDP to 23-25% in the next four years from around 20% now and to raise the share of exports to 43-45% of GDP from 37%.
"Following the revolution of 2018 hopes have been building that the new government will move decisively with structural reform and, in particular, fight with corruption," Liza Ermolenko, emerging Europe economist at Barclays, told Reuters.
"So far, the government has been making all the right noises, solidifying these hopes: the government's programme adopted early this year is a case in point".
“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.
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 .JPMEGDARMR in the JPMorgan emerging bonds benchmark has risen nearly 14% year-to-date compared to a 9.4% rise for Georgia .JPMEGDGEOR”, Reuters writes in the article.
"Armenian bonds outperformed many of their regional peers this year, which is a sign that investors who bought them clearly trust ongoing reforms," Igor Rapokhin, fixed income strategist at VTB Capital, told Reuters.
Haunted by record low yields in large parts of the developed world, many investors have scoured riskier emerging markets to put their money to work. With many of the larger emerging markets such as Turkey or South Africa facing some turmoil, smaller countries that pursue reforms are capturing fund managers' focus, Reuters said.
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