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Bank of Georgia prices $100m offering in bid to hedge against dollarisation

By Josh White

Date: Friday 22 Mar 2019

Bank of Georgia prices $100m offering in bid to hedge against dollarisation

(Sharecast News) - Bank of Georgia announced on Friday that its operating subsidiary, JSC Bank of Georgia, has successfully priced an inaugural $100m offering of 11.125% additional Tier 1 capital perpetual subordinated notes.
The FTSE 250 firm said the notes would be callable after 5.25 years and on every subsequent interest payment date, subject to the prior consent of the National Bank of Georgia.

It explained the notes were being issued in accordance with 'Regulation S', and sold at an issue price of 100.00%.

Bank of Georgia said the notes were expected to be listed on the Irish Stock Exchange, and to be rated B- by Fitch.

On closing, the issuance was expected to be the first international offering of additional Tier 1 capital notes from Georgia and the South Caucasus region.

"I am delighted that Bank of Georgia has issued the first ever additional Tier 1 capital notes from Georgia and the South Caucasus region," said chief executive officer Archil Gachechiladze.

"Basel III regulations recently introduced in Georgia enable this type of capital optimisation and this US dollar issue provides the bank with an opportunity to diversify our capital structure from a foreign currency perspective, and provide a natural hedge against dollarisation in the economy."

Gachechiladze said that, subject to final regulatory approval, the board expected the issue to add approximately 230 basis points to the bank's Tier 1 capital ratio.

"To reduce the carry-cost of this new issuance, we intend to repay a portion of existing Tier 2 capital instruments upon receipt of a consent of the National Bank of Georgia."

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