Record PLC (LSE:REC), the global currency and asset manager, has said its Emerging Market Sustainable Finance Fund was the sole investor in the latest transaction of Armenian currency bonds issued by the European Bank for Reconstruction and Development (EBRD).
The company noted that the EBRD has raised Armenian dram (AMD) 2bn (about US$5mln) from the new issue of offshore Armenian dram-denominated bonds, providing funds for the EBRD's own lending to the Armenian economy in local currency. The transaction was structured as a 5-year floating rate bond maturing in November 2027 with listing in London and arranged by HSBC Bank.
In a statement, Dr Dmitri Tikhonov, CIO of the asset manager said: "We are delighted to partner with EBRD on this important transaction that will make local currency credit available to Armenian enterprises. The team at Record, together with our investors, remain committed to support the development of local currency markets and promote sustainable currency solutions to end-borrowers in emerging markets. This transaction is an important step in our ambition to deliver greater inclusion and long-term sustainable growth in the local communities and we look forward to engaging with the development community to see more efforts in this direction."
The EBRD has made cumulative investments in Armenia in excess of €2.1bn, and the Armenian country strategy emphasises the importance of developing capital markets and promoting local currency financing. The first loan in dram was signed in March 2010, and in total the EBRD has extended AMD 150bn (approximately €384mln) of loans that can or could have been drawn down in AMD.
The most recent local currency financed project in Armenia is worth the equivalent of US$14mln to boost lending to local private micro, small and medium-sized enterprises in the country.
The semi-annual coupon rate on the EBRD's dram bond issue was linked to a 6-month AMD T-Bill rate, which is one of the reference points in the Armenian government bond yield curve published by the Central Bank of Armenia on its website and used by the market participants as a pricing benchmark for their financial products.
The Record Emerging Market Sustainable Finance Fund aims to support the development of local currency markets in low and middle-income economies together with improved access to long-term local currency lending. This unique investment strategy represents a significant innovation in currency markets and a commitment to the development of new sustainable investment products for private clients globally, which Record expects to have broad and growing appeal for years to come.