Regional Fixed Income Market Watch Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, Ukraine

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1 Regional Fixed Income Market Watch Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, Ukraine Regional Fixed Income Highlights US GDP growth in 4Q17 was revised down to an annualized 2. y/y (2nd estimate) from an annualized 2. y/y (advance estimate). GDP growth in EU19 was 2. y/y in both 3Q17 and 4Q17. Based on rapid estimates, in January 218 economic growth was 1. y/y in Armenia, 4. y/y in Kazakhstan, 4. y/y in Belarus, 4. y/y in Georgia, 2. y/y in Russia, and 2. y/y in Azerbaijan. Economic growth in Ukraine came in at 1. y/y in 4Q17. Annual inflation in the US was 2. in January 218 unchanged from December 217. Based on the Eurostat flash estimate, annual inflation in EU19 was down to 1. in February 218 from 1. in January 218. In February 218, annual inflation decreased in Georgia (2.), Kazakhstan (6.), Turkey (1.) and Ukraine (14.) and increased in Armenia (3.). In Russia inflation remained unchanged at 2. in February 218. January 218 figures indicate a decrease in annual inflation to 4. in Belarus and 5. in Azerbaijan. As of 12 March 218, monetary policy rate is 13. (down from 15.) in Azerbaijan, 1. (down from 11.) in Belarus, 7. (down from 7.7) in Russia and 9. (down from 9.7) in Kazakhstan. Meanwhile, the policy rate was raised to 17. from 16. in Ukraine. The policy rate has remained unchanged in other countries. S&P raised both foreign and local sovereign credit ratings for Russia to BBB- from BB+ and to BBB from BBB-, respectively and the outlook was revised to stable from positive. Moody s downgraded credit rating of Turkey to Ba2 from Ba1 and changed the outlook to stable. GDP growth rate, y/y 1 1 4Q16 1Q17 2Q17 3Q17 4Q17 USA Euro Zone China Russia Turkey Source: Central banks, Statistics Offices, Bloomberg GDP, % change GDP, US$ bn Key macro indicators GDP per capita, US$ Inflation, period average Fiscal balance, % of GDP Current account balance, % of GDP E 218F E 218F E 218F E 218F E 218F E 218F Armenia ,533 3,69 3, Azerbaijan ,956 4,98 4, Belarus ,989 5,585 5, Georgia ,872 4,123 4, Kazakhstan ,456 8,585 9, Ukraine ,199 2,459 2, Russia , , , ,946 1,248 1, Turkey ,817 1,434 11, Source: IMF Sovereign credit ratings Monetary stance Fitch Moody s S&P Inflation, y/y MPR LC FC Outlook LC FC Outlook LC FC Outlook Armenia B+ B+ Positive B1 B1 stable NA NA NA Armenia Azerbaijan BB+ BB+ stable Ba2 Ba2 stable BB+ BB+ stable Azerbaijan 5.* 13. Belarus B B stable Caa1 Caa1 stable B B stable Belarus 4.* 1. Georgia BB- BB- stable Ba2 Ba2 stable BB- BB- stable Georgia Kazakhstan BBB BBB stable Baa3 Baa3 stable BBB- BBB- stable Kazakhstan Ukraine B- B- stable Caa2 Caa2 positive B- B- stable Ukraine Russia BBB- BBB- Positive Ba1 Ba1 positive BBB BBB- stable Russia Turkey BBB- BB+ stable Ba2 Ba2 stable BB+ BB negative Turkey Source: Fitch Ratings, S&P Global, Moody's *January 218 Source: Central banks, Statistics Offices Please refer to important disclaimers on the final page of this document.

2 1-Aug Aug Sep-14 3-Oct Oct Nov-14 5-Dec Dec Jan-15 6-Feb Feb-15 2-Mar-15 1-Apr-15 1-May May Jun-15 3-Jul Jul Aug-15 4-Sep Sep Nov Nov Jan Jan Mar May Jul Sep Nov Jan Eurobonds Regional currencies vs. US$ GEL/US$ AMD/US$ AZN/US$ BYN/US$ KZT/US$ UAH/US$ TRY/US$ RUB/US$ Note: National currency per US$; Index growth means depreciation of the local currency, index decline means appreciation of the local currency; Aug-214= Regional Eurobond balances, US$ bn Regional sovereign Eurobond spreads to UST, bps Georgia Armenia Azerbaijan Kazakhstan Ukraine Government Basic materials Energy Industrial Utilities Georgia 4/21 Armenia 9/2 Azerbaijan 3/24 Kazakhstan 1/24 Ukraine 9/21 2

3 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Snapshot: Georgia Yield curve 1 Crystal 1 1 BOG GLC M2 GOGC GRAIL BGEO Georgia , Galt & Taggart Source: National Bank of Georgia Bond universe by sector (US$ 1.8bn total) Real Estate Industrial 27. Local Energy 13. Government 27.. GEL/US$ GEL/EUR GEL/GBP Bond performance Issuer Currency Sector Ticker Maturity Coupon Issue Ratings (Fitch/S&P/Moody s) Size (Currency mn) Republic Of Georgia US$ Government GEORG Apr BB-/BB-/Ba London Georgian Oil & Gas Corp US$ Energy GEOROG Apr BB-/B+/ London BGEO Group US$ BGEOLN Jul BB-/-/B Dublin Bank Of Georgia GEL GEBGG Jun BB-/-/Ba Dublin Georgian Railway US$ Industrial GRAIL Jul B+/B+/ London Bid price YTM Mid Exchange Georgian Leasing Co US$ GEBGG Aug /-/ Georgia M2 Real Estate US$ Real Estate GEBGG Oct /-/ Georgia GWP GEL Utilities GEWRPW Dec ** BB-/-/- 3. N/A N/A Not Listed MFO Crystal GEL MCFNOR Dec B/-/ Not Listed *Company ratings **Floating rate with 3. over the NBG s refinancing rate, Galt & Taggart 3

4 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Snapshot: Armenia Yield curve Ardshininvest Armenia Bond universe by sector (US$ 1.3bn total) Source: Central Bank of Armenia Government 9 AMD/US$ AMD/EUR AMD/GBP Bond performance Issuer Currency Sector Ticker Maturity Coupon Issue Ratings (Fitch/S&P/Moody s) Size (Currency mn) Republic Of Armenia US$ Government ARMEN Sep-2 6. B+/-/B Dublin Republic Of Armenia US$ Government ARMEN Mar B+/-/B Dublin Bid price YTM Mid Exchange Ameriabank US$ AMERIA Jul WD/-/- 15 N/A N/A Armenia Ardshininvestbk US$ ARBANK Jul-2 1 B+/-/B Dublin Armswissbank US$ ARMSWI Apr /-/- 5 N/A N/A Armenia Armswissbank US$ ARMSWI Apr /-/- 5 N/A N/A Armenia 4

5 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Snapshot: Azerbaijan Yield curve IBAZ Emrax SOCAR Azerbaijan SGC Bond universe by sector (US$ 5.8bn total) Source: Central Bank of Azerbaijan 1 Government Energy 6 AZN/US$ AZN/EUR AZN/GBP Bond performance Issuer Currency Sector Ticker Maturity Coupon Issue Ratings (Fitch/S&P/Moody s) Size (Currency mn) Bid price YTM Mid Exchange Republic Of Azerbaijan US$ Government AZERBJ Mar BB+/-/Ba2 1, Stuttgart Southern Gas Corridor US$ Energy SGCAZE Mar BB+/-/Ba2 2, Dublin SOCAR US$ Energy SOIAZ Mar BB+/BB-/Ba2 1, London SOCAR US$ Energy SOIAZ Mar BB+/BB-/NR London Emraxbank US$ EMRXAZ Jan /-/ Baku IBAZ US$ IBAZAZ Jun WD/-/WR Stuttgart IBAZ US$ IBAZAZ Oct /-/WR Dublin 5

6 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Snapshot: Belarus BYN/US$ BYN/EUR BYN/GBP Source: National Bank of Belarus 6

7 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Snapshot: Kazakhstan Yield curve (sovereign) Kazagro Kazakhstan Kazkommerts Halyk Yield curve (banks) Fortebank Development Bank Eastcomtrans Yield curve (other sectors) Temir Zholy Kazmunaygas Bond universe by sector (US$ 22.7bn total) Industrial Source: National Bank of Kazakhstan Government Energy 3 KZT/US$ KZT/EUR KZT/GBP 7

8 Bond performance Issuer Currency Sector Ticker Maturity Coupon Issue Ratings (Fitch/S&P/Moody s) Size (Currency mn) Republic Of Kazakhstan US$ Government KAZAKS Oct BBB/BBB-/Baa3 1, London Republic Of Kazakhstan US$ Government KAZAKS Jul BBB/BBB-/Baa3 2, London Republic Of Kazakhstan US$ Government KAZAKS Oct BBB/BBB-/Baa3 1, London Republic Of Kazakhstan US$ Government KAZAKS Jul BBB/BBB-/Baa3 1, London Kazagro Natl Mgmt Hldg EUR Government KAZNMH May BBB-/BB-/ Dublin Kazagro Natl Mgmt Hldg US$ Government KAZNMH May BBB-/BB-/- 1, Dublin Kazmunaygas National Co US$ Energy KZOKZ Jul BBB-/BB-/Baa3 1, London Bid price YTM Mid Exchange Kazmunaygas National Co US$ Energy KZOKZ May-2 7. BBB-/BB-/Baa3 1, Frankfurt Kazmunaygas National Co US$ Energy KZOKZ Apr BBB-/BB-/Baa3 1, London Kazmunaygas National Co US$ Energy KZOKZ Apr BBB-/BB-/Baa3 1, Kazakhstan Kazmunaygas National Co US$ Energy KZOKZ May BBB-/BB-/Baa London Kazmunaygas National Co US$ Energy KZOKZ Apr BBB-/BB-/Baa3 2, Kazakhstan Kazmunaygas National Co US$ Energy KZOKZ Nov BBB-/BB-/Baa3 1, London Development Bank Of Kaz. US$ DBKAZ Jun BBB-/BB+/Baa Kazakhstan Development Bank Of Kaz. US$ DBKAZ Dec BBB-/BB+/Baa3 1, London Development Bank Of Kaz. US$ DBKAZ Mar BBB-/BB+/Baa Kazakhstan Fortebank US$ ALLIBK Jun NR/B/ Kazakhstan Fortebank US$ ALLIBK Dec /B/ Kazakhstan Halyk Savings Bank-Kaz. US$ HSBKKZ Jan BB/BB/Ba London Kazkommertsbank US$ KKB May BB-/B+/B London Kazkommertsbank US$ KKB Dec BB-/B+/ Kazakhstan Eastcomtrans US$ Industrial EASTCM Apr WD/-/B London Kazakhstan Temir Zholy CHF Industrial KTZKZ Jun-19 BBB-/BB-/Baa Zurich Kazakhstan Temir Zholy US$ Industrial KTZKZ Oct BBB-/NR/WR 7 N/A N/A London Kazakhstan Temir Zholy CHF Industrial KTZKZ Jun BBB-/BB-/Baa Zurich Kazakhstan Temir Zholy US$ Industrial KTZKZ Jul BBB-/BB-/Baa3 1, London 8

9 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Snapshot: Ukraine Yield curve (sovereign) 1 Ukreximbank 1 Ukraine Yield curve (banks) 12 Privatbank First Ukr. Oschadbank Yield curve (other sectors) Ferrexpo Uz Rail MHP Source: National Bank of Ukraine Bond universe by sector (US$ 2bn total) Industrial Basic Energy Materials Consumer Government 8 UAH/US$ UAH/EUR UAH/GBP 9

10 Bond performance Issuer Currency Sector Ticker Maturity Coupon Issue Ratings (Fitch/S&P/Moody s) Size (Currency mn) Ukraine Government US$ Government UKRAIN Sep B-/B-/Caa2 1, Dublin Ukraine Government US$ Government UKRAIN Sep B-/B-/Caa2 1, Dublin Ukraine Government US$ Government UKRAIN Sep B-/B-/Caa2 1, Dublin Ukraine Government US$ Government UKRAIN Sep B-/B-/Caa2 1, Dublin Ukraine Government US$ Government UKRAIN Sep B-/B-/Caa2 1, Dublin Ukraine Government US$ Government UKRAIN Sep B-/B-/Caa2 1, Dublin Ukraine Government US$ Government UKRAIN Sep B-/B-/Caa2 1, Dublin Ukraine Government US$ Government UKRAIN Sep B-/B-/Caa2 1, Dublin Ukraine Government US$ Government UKRAIN Sep B-/B-/Caa2 1, Dublin Ukraine Government US$ Government UKRAIN May-4. -/B-/- 3, N/A Dublin Ukreximbank US$ Government EXIMUK Apr B-/-/Caa Dublin Ukreximbank US$ Government EXIMUK Feb CC/-/Caa Dublin Ukreximbank US$ Government EXIMUK Jan B-/-/Caa Dublin Ferrexpo Finance US$ Basic Materials FXPOLN Apr B/B/Caa Dublin Ferrexpo Finance US$ Basic Materials FXPOLN Apr B/B/Caa Dublin Avangardco Investments US$ Consumer AVINPU Oct WD/-/ London MHP US$ Consumer MHPSA Apr B/B/ Dublin Dtek Finance US$ Energy DTEKUA Apr WD/-/WR 75 N/A N/A Trace First Ukr. US$ PUMBUZ Dec NR/-/WR Zurich Bid price YTM Mid Exchange Privatbank US$ PRBANK Feb /-/ Channel Isl. Oschadbank US$ OSCHAD Mar B-/-/Caa Dublin Oschadbank US$ OSCHAD Mar B-/-/Caa Dublin Uz Rail Via Shortline US$ Industrial RAILUA Sep CCC/CCC+/ Dublin 1

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