Demand for SOCAR bonds sharply soars

Baku. 24 November. REPORT.AZ/ Significant price increase was recorded in the securities market of Azerbaijan. Price of SOCAR bonds, most traded securities in the country, has risen sharply and exceeded $ 1,010.

Report informs referring to the PSG Capital investment company, a market-maker of the bonds, purchase price of SOCAR bonds at the stock exchange is $ 1,004.80, while selling price is $ 1,010.

This figure is much higher than at the beginning of the week. So, on November 20, purchase price of SOCAR bonds was $ 1 003.2, and selling price $ 1,007.6.

Notably, at present, SOCAR bonds can be purchased only from the secondary market, namely through the stock exchange from current holders of the bond. Bondholders do not want to sell them at a price of less than $ 1,010: "Bond prices usually reached this level during short period till maturity date. Now, however, nearly 2 months left till interest payment, prices are rising".

PSG Capital says that cause for price rise is sharp increase in demand for the bonds, supply in the market cannot meet this demand: "There are numerous offers for purchasing bonds by both physical and legal persons. But the proposals in the secondary market cannot meet this demand".

There are several reasons for the increase in demand for bonds. First of all, interest rates on bonds have been paid timely according to the schedule in one year since issuance of the securities. During this period, bondholders made benefit of $ 5 mln.

Another reason is that the bonds currently offer the best conditions in the market. SOCAR bonds with a nominal value of $ 1,000, generating 5% annual interest in dollars, provide more revenue than other instruments. Due to return guarantee by SOCAR, price of bonds never drops below $ 1,000 and can be converted into cash in just a few minutes. Notably, there is no such guarantee for any securities in Azerbaijan, not even in the countries of the region.

All this resulted in interest in securities and rising prices. Notably, the next interest payment on bonds will be at the beginning of 2018.