Regional Fixed Income Market Watch
Monetary policy: In Nov-21, all regional central banks kept key rates unchanged except Turkey, which further cut the rate by additional 100bps to 15% on 18 November, after reducing the rate by 200bps in Oct-21. After the rate cut, Turkish Lira collapsed to all time low.
FX market: In Nov-21, all regional currencies depreciated against the US dollar with the exception of the Georgian Lari, which strengthened 1.0% m/m. Regional currencies were affected by number of factors, including regional geopolitical tensions, oil price drop and elevated virus cases. Turkish Lira was the worst performer, depreciating by 40.3% during a moth, followed by Belarusian Rouble (BYN), which lost 5.0% and Russian Rouble (RUB) depreciating by 4.4%. Armenian Dram (AMD) and Azeri Manat (AZN) weakened slightly, by 2.0% and 0.2%, respectively.
Georgia money market: In Nov-21, GEL 141mn treasury notes and GEL 50mn treasury bills were sold. Weighted average interest rates on 5-year instrument stood at 9.154%, while average rate on 2-year notes stood at 9.097%. Weighted average interest rates came in at 9.044% for 1-year instrument, while it still remained higher at 9.40% for 6-month instruments. Notably, non-residents’ treasury holdings continued declining in Oct-21, down 21.5% m/m to GEL 412.4mn, after dropping by 5.8% m/m in September, bringing down the share of non-residents in total outstanding holdings by 2.3ppts to 7.9% in Oct-21.
Regional sovereign Eurobond market: Regional political tensions and virus spread resulted in selloff in regional Eurobonds in Nov-21 (please note that bond yields and prices move in opposite direction). UKRAINE 26 was the worst performer of the month, with the yield widening by 178.1bps, while the price declined by 6.9% m/m. On a monthly basis, yields significantly widened also on BELARUS 27 and TURKEY 26 up 73.3bps and 72bps, respectively, while prices declined by 3.2% and 2.7%. RUSSIA 23 also performed poorly, with the yield increasing by 55.3bps m/m, while yield on GEORGIA 26 was up 43.6bps m/m in the same period. KAZAKH 25 was the best performer among peers, with yield up 20.6bps m/m, while the price declined only by 1%.
Georgian corporate Eurobond market: Among the Georgian corporate issuers, GGU was the best performer in Nov-21, with yield declining by 1.1bps m/m. Yields on GEOCAP 24, BOG perp and TBC perp increased slightly, up 1.8bps, 4.2bps and 4.9bps, respectively. TBC 24 was the worst performer with yield widening by 31.1bps m/m, while other corporate Eurobonds yields widened in the range of 12-20bps in Nov-21.