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Year: Month: All releases Economy Sectors Companies
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Regional Fixed Income Market Watch | Jul 2018

15 Aug, 2018

Highlights

  • Real GDP growth in the US was up to an annualized 4.1% y/y (advance estimate) in 2Q18 from an annualized 2.2% y/y recorded in 1Q18. In July 2018, unemployment rate decreased by 0.1ppts to 3.9% from 4.0% in previous month. GDP growth in EU19 was down to 2.1% y/y in 2Q18 from 2.5% y/y in 1Q18. Unemployment rate in EU19 was 8.3% in June 2018 down from 8.4% in May 2018. China’s economy grew by 6.7% y/y in 2Q18, 0.1ppts lower than in 1Q18.
  • Based on rapid estimates, in June 2018 economic growth came in at 9.6% y/y in Armenia, 5.3% y/y in Kazakhstan, 4.0% y/y in Georgia and 1.5% y/y in Russia. In 1H18, real GDP growth was 4.5% y/y in Belarus and 1.3% y/y in Azerbaijan.
  • In July 2018, annual inflation in the US was 2.9% unchanged from previous month. Based on the Eurostat flash estimate, annual inflation in EU19 was 2.1% in July 2018 up from 2.0% in June 2018. 
  • In July 2018, annual inflation was below to the target level in Armenia (2.3%), Russia (2.5%), Georgia (2.8%) and Belarus (4.1%); inflation was within the target in Kazakhstan (5.9%), and above the target in Ukraine (8.9%) and Turkey (15.9%).
  • Monetary policy rate was cut to 7.0% (from 7.25%) in Georgia and increased to 17.5% (from 17.0%) in Ukraine in July 2018. The policy rate has remained unchanged in other countries.
  • In July 2018, Fitch downgraded both foreign and local sovereign credit ratings for Turkey to BB from BB+ and to BB+ from BBB-, respectively and the outlook was revised to negative from stable.

Please see the full report for detailed coverage of the fixed income markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, and Ukraine.


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Georgian Oil and Gas Corporation - Solid Performance, Good Prospects

14 Aug, 2018

GOGC released strong audited FY17 results. Revenue remained largely flat, standing at US$ 267.7mn, while the reduction in the average gas purchase price contributed to the decline in operating expenses (-7.9% y/y to US$ 188.9mn). As a result, adjusted EBITDA reached US$ 93.7mn, up 17.7% y/y. Higher adjusted EBITDA and the considerable cash balance drove the net-debt-to-adjusted EBITDA ratio to 0.9x as of end-17 compared to 2.2x a year before. With significant capital expenditures planned for 2018-20, we expect this ratio to temporarily deteriorate in 2018 but remain comfortably below the 3.75x Eurobond covenant. The commissioning of the Gardabani II CCPP from 2019 is expected to generate an additional steady cash flow stream for GOGC and bring this ratio close to 1.0x.

Revenue flat
FY17 revenue remained flat at US$ 267.7mn. Gas and electricity sales – two major revenue streams accounting for 86.3% of the total revenue – remained relatively stable, growing 2.8% y/y and 2.2% y/y, respectively. Revenue from rent of pipelines was down 17.6% y/y to US$ 23.9mn while crude oil sales rose 27.4% y/y, helped by increased oil prices worldwide.

Operating expenses down
The cost of gas, the largest expense category accounting for 82.9% of total operating expenses, was down 4.8% y/y to US$ 157.4mn. Other operating expenses were also down (-18.5% y/y). The strengthening of the GEL against the US$ between end-16 and end-17 led to a non-cash FX gain of US$ 2.7mn in the reporting period compared to a US$ 21.3mn loss last year.  

EBITDA and profitability improved
Reduced operating expenses coupled with stable revenue stream translated into a 17.7% y/y increase in adjusted EBITDA, which came in at US$ 93.7mn. The adjusted EBITDA margin also improved to 35.0% in 2017 from 29.7% a year before. Appreciation of the local currency in 2017 helped the bottom line, which more than doubled to US$ 87.9mn in 2017.

Major capital projects planned over 2018-20
China Tianchen Engineering Corporation was chosen to construct the Gardabani II CCPP with installed capacity of 230MW. The active phase of construction began in spring 2018 and completion is scheduled for winter 2019-20. The construction will be fully funded from GOGC’s internal sources.

Construction of the underground gas storage reservoir is planned for 2019-20. The German Development Bank (KfW) and European Investment Bank (EIB) are among the international organizations being considered for financing the US$ 300mn project.

Compliant with Eurobond covenants
With significant growth of adjusted EBITDA, the net-debt-to-adjusted EBITDA ratio improved considerably from 2.2x in 2016 to 0.9x in 2017. This ratio is expected to remain comfortably below the Eurobond covenant of 3.75x over the medium term.


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Regional Fixed Income Market Watch | June 2018

17 July, 2018

Highlights

  • Real GDP growth in the US was revised down to an annualized 2.0% y/y (3rd estimate) in 1Q18 from an annualized 2.2% y/y (2nd estimate). In June 2018, unemployment rate increased by 0.2ppts to 4.0% from 3.8% recorded in previous month.
  • Based on rapid estimates, in May 2018 economic growth came in at 7.5% y/y in Georgia, 5.4% y/y in Armenia, 4.9% y/y in Kazakhstan and 3.7% y/y in Russia. In 5M18, real GDP growth was 4.7% y/y in Belarus and 1.1% y/y in Azerbaijan.
  • In June 2018, annual inflation in the US was 2.9% up from 2.8% in previous month. Based on the Eurostat flash estimate, annual inflation in EU19 was 2.0% in June 2018 up from 1.9% in May 2018.
  • In June 2018, annual inflation was below to the target level in Armenia (0.9%), Georgia (2.2%), Russia (2.3%) and Belarus (4.1%); inflation was below expectation in Azerbaijan (1.9%); inflation was within the target in Kazakhstan (5.9%), and above the target in Ukraine (9.9%) and Turkey (15.4%).
  • Monetary policy rate was cut to 10.0% (from 11.0%) in Azerbaijan and to 10.0% (from 10.5%) in Belarus in June 2018. The policy rate has remained unchanged in other countries.

 

Please see the full report for detailed coverage of the fixed income markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, and Ukraine.


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Regional Fixed Income Market Watch | May 2018

15 June, 2018

Highlights

  • Real GDP growth in the US was revised down to an annualized 2.2% y/y (2nd estimate) in 1Q18 from an annualized 2.3% y/y (advance estimate). Turkish economy grew by 7.4% y/y in 1Q18.
  • Based on rapid estimates, in April 2018 economic growth came in at 7.3% y/y in Armenia, 6.5% y/y in Georgia, 4.4% y/y in Kazakhstan and 1.7% y/y in Russia. In 4M18, GDP was up 4.8% y/y in Belarus and 1.2% y/y in Azerbaijan.
  • In May 2018, annual inflation in the US was 2.8% up from 2.5% in previous month. Based on the Eurostat flash estimate, annual inflation in EU19 was 1.9% in May 2018 up from 1.2% in April 2018.
  • In May 2018, annual inflation was below to the target level in Georgia (2.5%), Russia (2.4%), Armenia (1.6%) and Belarus (4.4%); inflation was below expectation in Azerbaijan (2.0%); Inflation was within the target in Kazakhstan (6.2%), and above the target in Turkey (12.2%) and Ukraine (11.7%).
  • The Federal Reserve (central bank of the US) raised the target range for the federal funds rate for the 2nd time this year by 25 basis points to 1.75%-2.0%, in June 2018.
  • Monetary policy rate was raised to 17.75% (from 8.0%) in Turkey and cut to 9.0% (from 9.25%) in Kazakhstan as of 14 June 2018. The policy rate has remained unchanged in other countries as of mentioned date.

 

Please see the full report for detailed coverage of the fixed income markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, and Ukraine.


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