Weekly Market Watch by Galt&Taggart

Weekly Market Watch by Galt&Taggart

The FINANCIAL -- Economy

Real GDP up 2.1% y/y in May 2016

Georgia’s real GDP grew 2.1% y/y in May 2016, after 4.3% y/y growth in April 2016, according to GeoStat’s preliminary estimates. In 5M16, output growth averaged 2.9% y/y (growth was 2.5% y/y in 5M15). Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.

NPLs at 3.8% in May 2016

In May 2016, the loan portfolio grew 5.2% y/y, excluding the exchange rate effect (+2.3% y/y and -1.8% m/m in unadjusted terms), to GEL 15.2bn (US$ 7.1bn). Deposits grew 11.1% y/y, excluding the exchange rate effect (+5.6% y/y and -6.5% m/m in unadjusted terms), reaching GEL 13.5bn (US$ 6.3bn). NPLs remain under control at 3.8% in May 2016, up 0.4ppts y/y and up 0.2ppts m/m.

Joint stock company Bank of Georgia announces tender offer and consent solicitation for its US$ 400mn notes due 2017

On 30 June, 2016 Joint Stock Company Bank Of Georgia launched the invitation to the holders of its outstanding US$ 400mn 7.75% fixed rate notes due 2017 to tender any or all of such notes held by the holder for purchase by the Bank of Georgia for cash. Total consideration offered of 105.75% comprises the tender offer consideration (102.75%) and the early tender premium (3.0%) for tender submissions made before the early redemption deadline of 14 July, 2016. The Offer begins on 30 June, 2016 and will expire on 28 July, 2016, unless the offer is extended or terminated. 

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobonds (GEBGG) closed at 3.5% yield, trading at 104.1 (+0.4% w/w). GOGC’s Eurobonds (GEOROG 05/17) were trading at 101.9 (+0.1% w/w), yielding 4.6% and (GEOROG 04/21) were trading at 103.9 (+0.4% w/w), yielding 5.8%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 111.0 (+0.4% w/w), yielding 5.6%. Georgian Sovereign Eurobonds (GEORG) closed at 110.6 (+0.6% w/w) at 4.4% yield to maturity. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 26.24/share (+7.10% w/w and +4.46% m/m). More than 436k shares traded in the range of GBP 22.41 – 26.39/share. Average daily traded volume was 85k in the last 4 weeks, more than in the previous month. FTSE 250 Index, of which BGEO is a constituent, gained 2.36% w/w and lost 3.47% m/m. The volume of BGEO shares traded was at 1.10% of its capitalization. 

 TBC Bank (TBCB LI) closed the week at US$ 13.20 (+4.76% w/w and +7.32% m/m). More than 45k GDRs changed hands in the range of US$ 12.50 – 13.20/GDR. Average daily traded volume was 56k in the last 4 weeks, more than in the previous month.

Georgia Healthcare Group (GHG LN) shares closed at GBP 2.91/share (+5.72% w/w and +13.45% m/m). More than 104k shares were traded in the range of GBP 2.75 – 2.95/share. Average daily traded volume was 62k in the last 4 weeks. The volume of GHG shares traded was at 0.04% of its capitalization. BGEO Group PLC (BGEO LN)

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 300mn (US$ 128.1mn).

Certificates of deposit: NBG sold 182-day, GEL 20mn (US$ 8.4mn) certificates of deposit, with an average yield of 6.66% (down 51bps from previous issue).

Ministry of Finance Treasury Notes: 1-year GEL 75.0mn (US$ 31.6mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on June 29, 2016. The weighted average yield was fixed at 7.181%. The nearest treasury securities auction is scheduled for July 6, 2016, where GEL 30mn nominal value 2-year T-Notes will be sold.