Demand for SOCAR bonds soars

Baku. 21 April. REPORT.AZ/ In last few days, demand for bonds issued by the State Oil Company of Azerbaijan Republic (SOCAR) soars.

The secondary market maker of the bonds, PSG Capital told Report.

According to information, during April 18-21 the company received numerous requests mainly from individuals for purchase of bonds. As a result, investment companies sold to individuals bonds worth $ 796,000 just for last 4 days.

The market maker told that volume of orders for purchase of SOCAR bonds differ: “Some individuals ordered 2-3, even 1 bond, while the others look for 100-150, even 200 bonds at once”.

Since starting of bonds’ circulation in secondary market in October 2016, overall volume of trading operations with SOCAR bonds reached $ 72 mln.

Interestingly, although price of bonds after first interest payments on January 17 dropped to $ 1000-1001, it became fixed around USD 1003-1005 after second phase of interest payments. In other words, the growing demand for the bonds boosted their prices.

Notably, prices for SOCAR bonds sharply rose on the eve of interest payments. Several days before payment, prices of bonds in secondary market jumped to $ 1013-1014, which  is a record price in last months. In general, the highest price paid for SOCAR bonds in secondary market was USD 1024.

Stock market experts say that the reason behind soaring demand and rising prices for bonds is the next interest payment and understanding of advantages of SOCAR bonds by investors. Notably, the next – second interest payment for SOCAR bonds took place on April 17. Total USD 1.25 mln - USD 12.5 per bond were paid to investors within frame of interest payments. The first interest payment was made on January 17.

Notably, SOCAR bonds envisaged for internal market were issued in October 2016. 5-year bonds worth total USD 100 million offer 5% annual interest rate. SOCAR bonds were oversubscribed more than twice ($203 mln) in first trade with participation of only local individuals and legal entities. The bonds started to circulate in secondary market since October 17.

Notably, SOCAR bonds with USD1000 nominal value offer 5% or USD 50 annual income. Interest payments for bonds are made once in three months, four times in a year. First interest payment was made on January 17, the second - on April 17. Next payments in 2017 have been scheduled to July 17 and October 17.

In order to purchase bonds, customers can visit "ASAN Service" facilities No.1 or No.5 and call *1999 hot line.