BAKU

Azerbaijan’s state energy firm SOCAR plans to issue five-year bonds worth $100 million on the domestic market in September this year, SOCAR Capital, the company’s subsidiary,  said.

Citizens of Azerbaijan and foreigners, as well as local and foreign entities, will be able to subscribe to the bond issue, although priority will be given to individual investors, the company said in a statement.  Foreigners and foreign legal entities will also be able to buy from bondholders in the secondary market.

SOCAR Capital said that subscription to the bond issue would begin on September 20 and would last 10 days.

“The issue is divided into 100,000 bonds with a par value of $1,000 per security. The coupon rate is 4.5 percent per annum,” the company said.

It added that payment to bondholders would be made once a quarter.

The bonds can be purchased at kiosks, as well as through investment companies operating in Azerbaijan.

The placement of bonds is planned at the site of the Baku Stock Exchange (BSE) by open subscription. SOCAR plans to use the funds raised from the placement of bonds to finance obligations under various projects, including reconstruction of the Baku oil refinery, construction of a Urea plant, etc.

SOCAR placed $100 million of debut bonds on its domestic market in October 2016 to fund the repayment of some debts. Six years ago Azerbaijan’s economy and currency, the manat, came under intense pressure from the slide in oil prices, which also helped push SOCAR to a net loss for 2015 from a net profit a year earlier.

The demand for the five-year bonds with a 5 percent coupon totalled $203.6 million, or twice the amount on offer. 95 percent of the bonds were purchased by individual investors and the rest by corporate clients.

The volume of transactions in those bonds on the secondary market is currently $200 million. The bondholders are expected to receive a total income of $25 million when their maturity expires in October 2021.

In April, Fitch Ratings has affirmed SOCAR’s long-term Issuer Default Rating (IDR) and senior unsecured rating at ‘BB+’, the outlook on the long-term IDR is “negative” and the recovery rating is ‘RR4’.