Fixed Income Analysis /

IBA: From Baku, without love

    Tolu Alamutu
    Tolu Alamutu

    Credit Research Analyst, Banks

    Tellimer Research
    7 June 2017
    Published byTellimer Research
    c.80% recovery on 2019 bond: We upgrade the IBAZAZ 2019 bond to Hold from Sell. We estimate that the recoveries under Options 1 and 2 will be worth around 80% of par for Eurobond holders. Taking the cash interest payment into account, the total amount recoverable on the bond as a percentage of par does not differ much from current prices – the International Bank of Azerbaijan (IBAZAZ) 2019 bond was quoted in the low to mid 80s at the time of writing. For our conclusions, we have used discount rates of 5.25% and 5.5% for Option 1 and Option 2 respectively, to account for the difference in tenor between the two options.