Galt&Taggart published a report on Regional Fixed Income Market Watch. According to the report, increased US dollar interest rates and country specific risks widened regional Eurobonds yields in Jun-22 after some signs of improvement in risk sentiments in May-22. ARMENIA 25 was the best performer of the month, followed by KAZAKH 25 among regional sovereign Eurobonds, with yields widening by 26.8bps and 46.1bps, respectively. AZERB 24 and GEORGIA 26 yields widened by 102.2bps and 126.5bps, respectively. UZBEK 24 was the worst performer of the month, with yield widening by 208.7bps.

Georgian corporate Eurobond market: Among the Georgian corporate issuers, GGU was the best performer in Jun-22, with yield declining by 7.6bps m/m. Other bonds saw slight widening in yields, while BOG 23 posted the largest increase in yield at 121.5bps m/m.

FX market: During June-22, most regional currencies continued strengthening against US dollar like in previous month. Russian ruble (RUB) was the best performer gaining 13.3% m/m vs dollar, followed by Armenian dram (AMD) strengthening by 9.1% and Georgian lari (GEL) by 3.1%.

Meanwhile Kazakh tenge (KZT) weakened by 10.6% and Turkish lira (TRY) lost 1.8%.

Georgia money market: In Jun-22, GEL 150.0mn treasury notes and GEL 40mn treasury bills were sold. Reduction in interest rates continued on all instruments m/m explained by high demand. Weighted average interest rate on 5-year notes was 10.133%, on 2-year notes was 10.324%, on 1-year instrument was 10.390%, and stood at 10.645% for 6-month instruments. Notably, non-residents’ treasury holdings remained flat at GEL 399.1mn since Apr-22. As a result, the share of non-residents in total outstanding holdings stood at 6.8% (-0.1ppts m/m) in June-22.

Central banks continue focusing on fighting high inflation despite the weakening growth outlook. The Fed accelerated its rate hiking agenda to address persistent inflationary pressures and at its June meeting increased the rate by 75bps, the largest increase since 1994, to 1.75%. The ECB is expected to raise rates by 25bps in July, the first hike since 2011.