Highlights

  • COVID-19 pandemic has pushed the world economy into a recession and IMF forecasts global growth in 2020 to fall to -3%. IMF forecasts negative growth in 8 out of the 9 regional economies as pandemic and oil price drop deepened economic problems in 2020 (Georgia -4%, Armenia -1.5%, Azerbaijan -2.2%, Belarus -6%, Kazakhstan -2.5%, Ukraine -7.7%, Russia -5.5%, Turkey -5.0%, Uzbekistan +1.8%).
  • Central banks of advanced economies cut policy rates to historic lows. To date, central banks have announced plans to expand their provision of liquidity by at least US$ 6tn. By these measures regulators help to contain upward pressures on the cost of credit to ensure households and firms continue to have access to credit at an affordable price.
  • As of April 2020, monetary policy rate is at 5.25% in Armenia (-25bps), at 6.0% in Russia (unchanged from previous meeting), at 7.25% in Azerbaijan (unchanged), at 8.75% in Belarus (-25bps), at 9.0% in Georgia (unchanged), at 9.5% in Kazakhstan (-250bps), at 8.75% in Turkey (-100bps) and at 10.0% in Ukraine (-100bps).
  • Global investors sold more than US$ 100bn of EM assets since the start of the virus outbreak, resulting in fall in EM asset prices. Foreign investors sold more than US$ 72bn in EM equities and US$ 25bn in debt according to the Institute of International Finance.
  • Foreign exchange rates suffered in most emerging markets. Year to date GEL depreciated by 11%, RUB lost 23%, BYN lost 18%, TRY and UAH depreciated by 17% and KZT by 13% against USD.
  • Amid massive capital outflows EM bond yields grew as prices decreased. UKRAINE 21 (9.9% YTM; 97.3 price) was the worst performer among the selected sovereign Eurobonds, rising 594bps in yield YTD. GEORGIA 21 (5.8% YTM; 101.0 price) rose 335bps in yield. BELARUS 23 (7.7% YTM; 98.0 price) was up 315bps, TURKEY 21 (5.5% YTM; 100.1 price) increased 246bps, ARMENIA 25 (5.7% YTM; 106.0 price) widened by 228bps, AZERB 24 (4.4% YTM; 101.2 price) increased 150bps, UZBEK 24 (4.5% YTM; 101.0 price) was up 136bps in yield. KAZAKH 24 (2.6% YTM; 105.4 price) increased only 38bps, while RUSSIA 23 (2.2% YTM; 108.8 price) performed more strongly than other regional bonds, with yield decreasing 11bps YTD.
  • Among Georgian corporate placements, SILKNET 24 (14.5% YTM; 89.5 price) was the worst performer, with its yield jumping by 684bps YTD, followed by GOGC 21 (10.3% YTM; 96.7 price) which widened by 717bps and GRAIL 22 (7.9% YTM; 99.7 price) which was up by 431bps. GCAP and Georgian banks performed relatively better, with GEOCAP 24 (8.5% YTM; 92.2 price) up 199bps in yield, TBC 24 (7.7% YTM; 93.0 price) up by 288bps and BOG 23 (5.7% YTM; 100.9 price) up 140bps in yield.

Please see the full report for detailed coverage of the fixed income markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, Ukraine, Russia, Turkey, Uzbekistan