FMO issues first locally denominated Georgian bond

FMO has issued its first locally denominated Georgian five-year bond via a public placement on the Georgian Stock Exchange. The notes fund a GEL160 million ($65.3 million) loan to Bank of Georgia (BoG). The natural hedge on the deal will enable BoG to use the cash to finance its lari-denominated lending business whilst avoiding currency mismatches on its balance sheet. Galt and Taggart was placement agent and bookrunner.

The coupon on the bond is equivalent to the rate of three-month National Bank of Georgia certificates of deposit. The bond is zero risk weighted under National Bank of Georgia capital adequacy regulations and can be used as collateral for repos with the central bank.

Last year FMO also issued a dollar denominated three-year lari-linked note. The deal had a notional value of GEL43.7 million ($18 million), paid a 7.35% coupon, and was structured, arranged and distributed by Citibank. 

Both deals support Georgia’s drive to ‘de-dollarize’ its economy and encourage the growth of domestic capital markets.