Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

NPLs at 3.9 y/y in July 2016 

In July 2016, the banking sector loan portfolio increased 8.4% y/y after growing 8.2% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 10.5% y/y and 1.4% m/m to GEL 16.6bn (US$ 7.1bn). Deposits were up 13.2% y/y, excluding the exchange rate effect, driven by FX-denominated deposit growth, resulting pick up in deposit dollarization to 68.9% in July from 67.3% in previous month. In nominal terms, deposits were up15.3% y/y and 3.1% m/m to GEL 14.8bn (US$ 6.3bn). NPLs stood at 3.9% in July 2016, up 0.6ppts y/y and up 0.2ppts m/m.

NBG intervenes FX market 

Last week, NBG intervened on the FX market 2 times. On 22 August the bank purchased US$ 20mn and sold the same amount on August 25, aimed at curbing excessive fluctuation of the national currency. Overall, NBG bought total of US$ 278mn at 14 interventions during March 17 – August 22. Las week, GEL strengthened 0.9% w/w and 4.3% YTD against US$.

Fixed income

Corporate Eurobonds: Bank of Georgia Eurobonds (BGEOLN) closed at 5.5% yield, trading at 102.9 (+0.5% w/w). GOGC’s Eurobonds (GEOROG 05/17) were trading at 101.9 (unchanged w/w), yielding 4.2% and (GEOROG 04/21) were trading at 105.3 (+0.1% w/w), yielding 5.5%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 112.1 (+0.2% w/w), yielding 5.3%. 

Georgian Sovereign Eurobonds (GEORG) closed at 112.1 (+0.1% w/w) at 4.0% yield to maturity.Georgia Eurobonds, YTM (%)

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 780mn (US$ 339.5mn).

Certificates of deposit: NBG sold 182-day, GEL 20mn (US$ 8.8mn) certificates of deposit, with an average yield of 6.57% (up 13bps from previous issue).

Ministry of Finance Treasury Notes: 1-year GEL 40mn (US$ 17.6mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on August 24, 2016. The weighted average yield was fixed at 6.511%. The nearest treasury securities auction is scheduled for August 31, 2016, where GEL 10mn nominal value 10-year T-Notes will be sold.