“In 2016, the issuance of the first SOCAR Bonds, worth USD 100 million, for domestic capital markets received orders amounting to USD 204 million, marking a significant turning point in the local capital markets,” SOCAR Capital told International Finance.

Although the securities market had long existed in Azerbaijan, it was after the second issuance of SOCAR Bonds that a real influx into the market was observed among the Eurasian country’s population.

In 2021, the second “SOCAR Bonds” issuance, valued at USD 100 million, received offers exceeding USD 380 million. Of the purchased bonds, 60% belonged to individuals. The high liquidity, ease of transactions, and timely interest payments according to the schedule generated significant interest among both individuals and legal entities. The price of the bonds has never fallen below their nominal value (USD 1,000).

“For more than eight years, SOCAR Bonds have maintained the status of the most traded corporate bonds on the Baku Stock Exchange. SOCAR Bonds are the first securities in Azerbaijan to be widely bought and sold by the public and have inspired other corporate companies to issue their securities. As a result, dozens of corporate bonds are currently circulating in the domestic capital markets. The primary goal of issuing SOCAR Bonds was to contribute to the development of domestic capital markets and offer an alternative investment tool for local investors,” SOCAR Capital continued.

On January 15, 2025, SOCAR Capital achieved another milestone by leading SOCAR’s “green” bonds worth USD 200 million for Azerbaijan’s domestic capital markets. The designation of these bonds as “green” is no coincidence, as the funds raised will be allocated to SOCAR Green’s projects and investments aimed at enhancing the country’s renewable energy potential.

As is known, for Azerbaijan, which hosted the prestigious “COP29” event under the United Nations Framework Convention on Climate Change, the development and promotion of green energy are of paramount importance.

Issued under the slogan “Green Income, Green Future,” SOCAR’s “green” bonds aim to provide reliable and stable income to Azerbaijani citizens while supporting the country’s progress in green energy.

Through this initiative, SOCAR intends to support and accelerate the development of environmentally friendly energy sources and SOCAR Capital occupies an important role in this mission.

In just eight years, the company has made innumerable contributions to Azerbaijan’s capital markets. Some of these include the development of the infrastructure of the local capital market, expansion of the investor base, increase in exchange trading volumes, greater financial literacy, and channelling idle funds into the economy.

SOCAR Capital is working to improve Azerbaijani companies’ access to financial markets while also enhancing activity in the corporate bond market. The firm is actively promoting the trading of “SOCAR Bonds” through a market maker and is establishing a call centre to promptly address investors’ inquiries.

As of January 2025, SOCAR Capital has gone ahead with the move of implementing the third mass placement via subscription. The company is also collecting subscription orders from investors through multiple investment companies, banks, and the “ASAN Service,” ensuring wide public access.

The post SOCAR Bonds: An investment wave in Azerbaijan appeared first on International Finance.

Improving financial literacy, bringing passive cash funds, promoting the access of Azerbaijani companies to capital markets and bringing activities to Azerbaijan’s corporate bond market have been some of the notable achievements of SOCAR Capital.

Knowing SOCAR’s Purpose

SOCAR wants to attract and channel non-active funds into the Azerbaijan economy, thereby promoting the country’s capital markets for companies and creating new alternative investment opportunities in local capital markets.

During an interaction with International Finance, SOCAR Capital CEO Mr. Samir Kerimli said, “One of the main activity segments of ‘SOCAR Capital’ is the management of SOCAR Bonds. The first SOCAR Bonds issued in 2016 for USD 100 million received a subscription of USD 204 million, and this issue created a special turn in the domestic capital markets. The second SOCAR Bonds issued for 100 million USD in 2021 received more than 380 million USD bidding request. Around 60% of the 100 million USD bonds were purchased by individuals.”

Effecting The Changes

Through the issue of SOCAR Bonds, Azerbaijan capital markets experienced a real flow towards fixed income instruments.

“The price has never fallen below its nominal value (USD 1,000). The high level of liquidity, ease of operations and interest payments according to the schedule has aroused great interest in bonds among individuals and legal entities. It has been maintaining the status of the most traded corporate financial instrument on the Baku Stock Exchange for seven years. SOCAR Bonds are Azerbaijan’s first publicly traded securities issued by subscription method and have given incentives to other corporate companies to issue their securities. For this reason, there are dozens of corporate bonds currently circulating in the domestic capital markets,” Kerimli added.

SOCAR Bonds, as of December 2023, account for most of the secondary market operations on corporate bonds (excluding mortgage bonds) in Azerbaijan’s securities market. These bonds ensure high profitability, high liquidity, ease of operations and timely interest payments.

“Our main priority in SOCAR Bonds issued in 2016 and 2021 was that the product was reliable, liquid and guaranteed. During the secondary market operations at the Baku Stock Exchange, the presence of the market maker company over the five-year cycle period also eliminated all liquidity concerns. We also set a face value of USD 1,000, which made it affordable for most investors,” Kerimli told the International Finance.

Long Journey Ahead

SOCAR is cooperating with investment companies registered in Azerbaijan to make the bond processing easy for the customers.

SOCAR’s marketing orientation is based on the concept of societal marketing, to develop the securities market and ensure that the Azerbaijani citizens get a direct share of SOCAR’s income.

“Before issuing bonds for the domestic market, SOCAR implemented many socially oriented projects and is still implementing them today. However, establishing mutually beneficial direct relationships with citizens was a completely new initiative. For this reason, we have formed our bond products in both issues by taking into account the needs and wants of investors, especially individuals. At the same time, these steps led to a serious revival in the domestic capital markets and added value to the economy of our country. And this process still is ongoing,” Kerimli noted.

Azerbaijan’s bond products and the fixed income market were underdeveloped with a partially competitive environment and few profitable and reliable financial instruments before 2016. SOCAR changed the scenario by quickly achieving market leadership as the venture worked in a systematical, flexible and goal-oriented manner.

“During our initial issue, we made 25 million USD in interest payments to individuals and legal entities, and in our current issue, they will receive 22.5 million USD worth of total coupon payments by the end of the term. Altogether, we bring in the highest income to investors in dollars between 2016 and 2026. Our bonds are massive across the country, and in this regard, our leading position continues at the moment. We can increase our records further. Taking into account all these facts, we can state that SOCAR Bonds currently has a STAR position in the securities market according to the BCG Matrix,” Kerimli concluded.

The post The ‘SOCAR’ revolution in Azerbaijani capital market appeared first on International Finance.