OREANDA-NEWS. The European Bank for Reconstruction and Development (EBRD) marked an historic milestone in Georgia with the first-ever bond issue by an international financial institution in Georgian lari.  This offering will not only help to drive forward the development of the local capital market but is also an additional tool that will enable the EBRD to raise local currency in support of its lending programme in Georgia.

The two-year bond totaling 50 million lari (20.7 million euro) was jointly lead-managed and underwritten by two leading local financial institutions: JSC BG Capital, the wholly-owned brokerage subsidiary of Bank of Georgia, and TBC Bank.  The transaction is the first bond placed by the foreign issuer in Georgia and also represents the first floating rate note on the domestic market.

The coupon on the EBRD’s inaugural lari bond is flat to the three-month rate on certificates of deposit issued by the National Bank of Georgia. The bonds are eligible for sale and repurchase operations carried out by the National Bank of Georgia (NBG).

The EBRD has played a leading role in the development of the local currency and capital markets in Georgia, working with the Georgian government, the NBG and local financial institutions. The issuance of the lari bond is the latest development in the EBRD’s Local Currency and Capital Markets Development Initiative, which was launched in May 2010 in the wake of the global economic crisis. The Initiative aims to tackle excessive reliance on foreign capital and foreign exchange borrowing in emerging economies.

The EBRD seeks to encourage borrowing in local currency and also to develop or strengthen local capital markets, thereby increasing the supply of locally-sourced finance.

To date, the EBRD has invested a total of 1.86 billion euro for 167 projects in various sectors of the Georgian economy, and has mobilised a further 3 billion euro for these ventures from other sources of financing.