Bond Market Overview in Georgia (Fixed Income) 2017

Investments in Georgia, have been on my focus, probably since the day one since I relocated here (see: Living in Georgia), back in 2011. Unfortunately, it was hard to find a transparent and easy to understand stock exchange.

Sure, I found Georgia Stock exchange website, but what I saw there a few years ago, didn't give me a lot of confidence to trust the platform and investigate more, On the other hand, I was more interested in buying stocks, rather investing in bonds. For me, bonds have always sounded kind of boring, and in fact, I haven't yet invested in bonds. 

Now, at the end of 2017, some things have changed, I've started to build my million dollar investment fund, and I have been heavily investing in Georgian peer to peer lending, aka paydays loans. See: Invest in Georgia - Peer-to-Peer (P2P) lending -

For a short period of time (2014/2015), I invested in compound savings account in Georgia in national GEL currency, thus when Lari depreciated against both EUR and USD currencies for more than -15% I stopped my activities with savings accounts. See: My February Savings Report - GEL Loses Another 16.5% Against USD; -17% Against EUR

Now, I feel thankful I have kept records on the blog for more than 4 years already, and I can always browse through the archives to learn from my mistakes or success (and hopefully, you can too). Without much doubt, when peer to peer lending popped on my radar and offered to invest in Georgian payday loans with 17% annual return I started to build my portfolio there. 

I still feel worried about my investments in GEL currency, and if there is the thing I like the most about Mintos (after it's great performance), then it's an option to exchange currency directly on the platform. So my initial investments in GEL currency slowly but are exchanged to EUR currency and diversified across loans in others countries. Well, as this is not an article about Mintos, learn more about my experience in this article: Peer To Peer Lending Review After 9 Month of Investing

Now, returning to the bond market in Georgia. I don't know for sure, do things have changed a lot, since 2011, but one is for sure, Georgian Stock Exchange have upgraded their website, at least it looks more professional and as I like to think, looks more transparent. 

Screenshot of Georgian Stock Exchange website

Screenshot of Georgian Stock Exchange website

As I'm a dividend income type of investor, I was looking for stocks exclusively here, but as it was still hard to find detailed information about companies listed here and their dividend history, I decided to explore the bond market.

Ok, right now I should return to my investments on platform one more final time - the thing is, as much I like the platform, I don't trust it in a long-term, I've set my top limit how much I plan to invest there, right now the limit is at about EUR 5,000, after reaching which I plan to move profit (interest) earned there in bonds.

My initial plan is to acquire bonds listed on the Baltic stock exchange, but for the moment I would love to be informed about bond market in Georgia. I don't plan yet to purchase bonds in Georgia, as I'm planning to make my first investments in the Baltics. 

As I see it right now, both peer to peer lending and bonds are very similar investment opportunities, with peer to peer lending giving much higher, but riskier returns, while bond market giving lower but safer returns. At least that's what I believe right now.

Structure of my investment portfolio September 2017

Structure of my investment portfolio September 2017

Peer to peer lending took 36.9% from my investment portfolio at the end of September. If there is a classic 60/40 approach (60% bonds, 40% stocks), then right now my investment portfolio might look like a complete mess. On the other hand, if we look on peer to peer lending as a type of the bond investment, and actually convert some of them to actual bonds, then it looks much better. 

For a complete dividend income in September, read: September 2017 Dividend Income Report - $55.08

Bond market overview in Georgia in 2017

I've found there are an A and B listings available for Georgian bonds, available in GEL and USD currencies, with "cheapest" nominal set at $1,000 and highest GEL 1,000,000.

In total as of October 2017, there are 6 bonds available on market. I spent some time to build the following table, to give an easier overview on what should you expect from Georgian bond market

Issuer Currency Nominal Value Coupon Coupon type Maturity date
European Bank for Reconstruction and Development (EBRD) GEL 1,000,000 n/a n/a 11/06/2021
Silknet JSC GEL 1,000 RR + 350 BB Quarterly 18/08/2022
Georgian Leasing Company LTD USD 1,000 7% Semiannual 29/08/2020
M2 Real Estate JSC USD 1,000 7.50% Semiannual 07/10/2019
Nikora Trade LTD USD 1,000 11% Semiannual 18/03/2018
Nikora JSC USD 10,000 9% Quarterly 28/06/2019

Georgian bond market as of October 10, 2017. Data source: Georgian Stock Exchange

Now seeing coupon rates at 7%,7.5%,9% and even 11% for bonds issued in USD currency I feel like why I haven't been investing here yet? Let's agree it's rare to find such lucrative interest rates for bonds. On the other hand, higher coupon rates in USD are set for B listing only, meaning there is no government bailout if things go south.

Now, once I have a better overview of Georgian Bond market, I feel that in a foreseen future, I should open a local brokerage account (I'm hoping to make it happen with my existing Bank of Georgia account, see: Opening Bank Account in Georgia - Bank of Georgia) and purchase Georgian bonds.

I will keep an open eye on Georgian Stock exchange, write down my findings in the blog (make sure to subscribe below) and most probably will invest about USD 3,000 in Georgian Bond market in 2018.

As usual, let's do the math with lowest possible numbers: $3,000 + 7% = $3,210.

$210 interest annually would give me a nice boost to my overall dividend income. How about you? Are you investing in Georgian bond or stock market? Leave a comment. I would love to hear!