“Report”: Reasons for decline in Azerbaijan’s corporate bond market - ANALYSIS

Baku. 4 December. REPORT.AZ/ In January-September 2018, although the number of deals in the corporate bond market increased, their value has dropped.

Report’s analytical group says that 744 deals were closed on realization of debt instruments in the nine months, up 111 deals or 17.5% in comparison to a year earlier. However, the cost of the deals was AZN 521.341 million, down AZN 22.629 million or 4.13% by contrast to a year ago.

The decline can be caused by the following reasons:

- number of issuers attracting funds through bond issuance is low;

- investors show insufficient interest to market due to less bonds issuances from different sectors of the economy;

- companies intending to be borrowed from capital market don’t meet requirements of bond placement in public offering;

- potential issuers and investors have insufficient information advantages of corporate bonds.

In the reporting period, the corporate bond market is mainly formed by Mortgage and Credit Guarantee Fund (MCGF), as well as SOCAR bonds. Despite the fact that the value of stock market deals on corporate bonds grew by AZN 435 million or nearly 15%, value of stock market deals on other corporate bonds has declined by twice to AZN 87 million.

AZN 79 million or 91% of other corporate bonds market except for MCGF is secondary market, AZN 73 million or 92% is related to SOCAR bonds.

In the nine months, the new market of other corporate bond amounted to AZN 7.55 million. However, this figure is not heartwarming.

FIMSA announced that 2,562 deals worth AZN 1,896,900,000 are planned to be closed this year. Of this, relevantly 27.5% and 29% were closed at BSE.