Failure in Azerbaijan Government T-bills

Failure in Azerbaijan Government T-bills

Short-term government bonds (T-bills) of the Ministry of Finance of Azerbaijan, whose sales have resumed at the Baku Stock Exchange for the first time since 3 May 2013 are still not in grave demand. So far the MoF managed to raise through the sale of T-bills only AZN 2.8 million with target of AZN 16 million, while the first, second, fourth and fifth auctions on bonds of such kind turned out ineffective in 2013.

The BSE reports that on 7 May 2013 one investor submitted an order for AZN 2.5 million for purchase of 83.67% of T-bills with ISIN-code AZ0102006399, issued for AZN 3 million at face value. The order was submitted at the price of 99.53% at face value (claim for profitability: 1.89% per annum). Under MoF decision, it was satisfied on the requested price, and T-bills with ISIN-code AZ0102006399, with circulation term of 91 days were placed for AZN 2.5 million. Their repayment is scheduled for 6 August 2013.

As a result, the yield of T-bills with circulation period of less than one year on cut-off price fell by 0.12% from 2.01% to 1.89% as well as on weighted average price. For auctions of 2013 decline in yield on cut-off price is still 1.08%, as well as on weighted average price. During 2008-2013, the decline of yield was 6.07 points and 5.71 points respectively.

The yield on cut-off price for T-bills with circulation period of around one year (yesterday, the Ministry of Finance failed to sell T-bills of this type) remains at 3.74% as well as on weighted average price. The growth of this type of T-bills yield in 2012 was 0.24 points. In 2011, it did not change and in 2010 increased by 0.51 points. As a consequence, for 2008-13, there was a decrease in the yield of 7.68 point on cut-off price and by 7.96 points on weighted average price.

The Finance Ministry registered the issue prospectus of T-bills for AZN 180 million for 2013. So far, it has been announced 6 auctions, for which T-bills for AZN 16 million were set out and raised only AZN 2.807 million.

In 2012, the MoF also planned an issue of AZN 180 million, but for 46 auctions it raised only AZN 20.947 million. Last year, only eleven auctions were successful for placement of T-bills (5th, 8th, 9th, 14th, 15th, 21st, 23rd, 29th, 42nd, 45th and 46th) out of the 46 primary trading.

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