TBC Capital Releases Report on Fixed Income Securities in Georgia
On June 15, TBC Capital presented a research report on “Fixed Income Securities in Georgia”. The report describes the Bond Market in Georgia and discusses its future development trends.
According to the report, the treasury securities market is well developed in the country. On the other hand, the corporate fixed income securities market is at the early stage of development. The bond market has experienced tangible progress since 2014, when the National Bank of Georgia (NBG) launched a new regulation enabling the commercial banks to provide local publicly placed bonds as collateral for NBG loans. Despite the impressive growth over the last three years, publicly issued bonds outstanding was only GEL 232m at YE 2017. Market capitalization of corporate bond market in Georgia is 0.6% of GDP, much less than that of the selected peers.
The report also discusses the supporting factors for bond market development, including tax breaks, expected increase of corporate governance and transparency and improved regulations on the market. According to the TBC Capital team, the pension reform will further foster the corporate bond market development. Based on TBC Capital’s assumptions, it is expected that approximately 4% of pension assets will be invested in local corporate bonds and during the medium-term, the outstanding corporate bonds are expected to grow to GEL 1bn.
“The corporate bond is a relatively new product on the Georgian financial market,” says Irakli Elashvili, TBC Capital’s Managing Director. “There are various key factors, including tax breaks and National Bank of Georgia’s pledge rules, which play a pivotal role in supporting corporate fixed income market development in Georgia. The corporate bond market is at the development stage and we believe that more local corporations will consider financing their business activities via the issuing of corporate bonds. The increased appetite from corporations for bond financing is already prominent. Additionally, we believe that the pension reform will play a significant role in market development, creating an additional long-term GEL supply on the market.”
The Business Forum, organized by TBC Capital, was attended by representatives of the public and private sectors. The international rating agency, Scope Ratings GmbH, held a presentation on the corporate bond ratings process. During the business forum, TBC Capital, NBG, the Georgian Stock Exchange, JSC Silknet, BLC Law Office, Scope Ratings and ISET held a panel discussion on the challenges and opportunities within the fixed income securities market in Georgia.
The report will be published on the following link: www.tbcresearch.ge
TBC Capital is TBC Bank’s wholly-owned investment banking subsidiary and licensed brokerage firm. In 2017, TBC Capital became an integral part of TBC Bank’s Corporate and Investment Banking franchise. Its main lines of business include corporate finance and credit rating advisory, debt and equity capital markets, brokerage, and private research. TBC Capital is also a shareholder in the Georgian Stock Exchange and plays an active role in the development of its infrastructure.