Risk premiums for foreign investors are more than enough in the Armenian securities market.
General Director of Nasdaq OMX Armenia, Konstantin Saroyan, told the aforementioned to Armenian News – NEWS.am.
When assessing whether to enter the new developing market or not, foreign investors pay attention to how the possible risks, including currency ones, are covered. This is either hedging or, in its absence, risk premium, which is very adequate in Armenia now, Saroyan added.
Referring to the currency risks, Mr Saroyan noted that during the recent 5 years, the average devaluation of dram didn’t exceed 5 percent annually. Apparently, there have also been fluctuations, like at the end of 2014, but longer terms and trends should be assessed with regard to bonds, he stressed.
In this case, if considering that the yield of bonds in Armenian drams constitutes 13-14 percent in Armenia annually, 5 percentage points out of them make up the currency risk premium.
Thus, the profitability of dollar bonds on the Armenian market (where there is no such risk and no premium is needed) can total 7-8 percent (and this is usually the case), an index close to the sovereign Eurobonds of the republic, assessed in the range of 7-7.5 percent, Saroyan added.
Dollar bonds in Armenia are assessed 5-6 percentage points lower than the dram bonds (i.e. dollar bonds are considered to be more reliable).
