Georgia issues first 10-year GKO
TBILISI. March 7 (Interfax) - The Georgian Finance Ministry issued 10-year state treasury bonds (GKO) for the first time on the domestic market on Wednesday, the ministry told Interfax.
The ministry offered 5 million lari worth of the 10-year GKO at auction.
Six commercial banks took part in the auction and demand totaled 13.7 million lari so the ministry was able to sell all the bonds offered, a ministry spokesman said. Coupon yield was set at 12.3% per annum. Coupon yield will be paid semi-annually. The bonds mature on March 9 2022.
This is the seventh GKO auction in 2012, but the previous auctions offered only one-year, two-year and five-year bonds. Bond placements have totaled 85 million lari in face value.
The Georgian Finance Ministry plans another three auctions before the end of the first quarter, offering 40 million lari in one-, two-, and five- year GKO. The 2012 budget plans 100 million lari in bond placements on the domestic market. The Finance Ministry placed 413 million lari in GKO in 2011 (with a planned amount of 200 million lari), 10.8% less than in 2010.
Georgia resumed GKO issues on August 5 2009 after a four-year break to stimulate the economy. The money raised is used mostly to clear the budget deficit and also to implement infrastructure projects.
The debt ceiling written into the Georgian 2012 budget is 10.04 billion lari, or 37.9% of predicted GDP. Government foreign debt is expected to grow 8.9% to 8.12 billion lari (30.6% of GDP) and domestic debt is forecast to drop 3.1% to 1.92 billion lari (7.3% of GDP).
The official exchange rate on March 7 stood at 1.6593 lari/$1.