The European Bank for Reconstruction and Development (EBRD) will issue manat-denominated bonds in Azerbaijan for the first time. According to official information, the volume of the issuance will be 50 million manat (≈29.5 million USD), with 500 bonds issued, each carrying a nominal value of 100,000 manat (≈59,000 USD).

The bonds will be issued and repaid between October 1, 2025, and October 1, 2026, with the interest rate determined based on AZIR (Azerbaijan Interbank Interest Rate). Interest payments will be made quarterly, and the bonds will be listed on the Baku Stock Exchange.

This issuance is considered a key milestone in Azerbaijan's capital market, reinforcing the role of bonds in the national currency.

Historical context of the Azerbaijani securities market

The securities market has been a crucial component of modern economies since the 16th century in Europe. In developed countries, it serves as a central indicator of a market economy and heavily influences financial and investment policy.

In Azerbaijan, the development of the securities market has been a priority since independence. However, market volumes remain small, and securities have not yet played a significant role in the economy. Experts attribute this to high levels of monopoly, bureaucratic business structures, and the absence of a free investment environment.

Over the last three years, several steps have been taken to advance the market, including the issuance of large-scale securities by the Ministry of Finance, the resumption of repo operations by the Central Bank, and bond issuances by major state-owned enterprises.

Currently, Azerbaijan's capital market includes government bonds, corporate bonds, and short-term Central Bank notes. Government bonds are state-issued debt instruments used to fund urgent expenses or other measures. Corporate bonds are debt securities issued by private enterprises to attract capital. Central Bank notes are short-term securities issued for monetary policy purposes.

According to the Central Bank of Azerbaijan, in January-June 2025, the securities market saw 36.856 billion manat (≈21.8 billion USD) in transactions - a 98% increase compared to the same period in 2024. Of this, 3.072 billion manat (≈1.81 billion USD) was in the primary market (down 28.2%), while 33.784 billion manat (≈19.93 billion USD) was in the secondary market (2.4 times higher than last year).

A total of 15,920 deals were concluded, including 1,494 in the primary market (up 26.4%) and 14,426 in the secondary market (2.3 times higher).

Repo operations dominate the market, mainly conducted by the Central Bank. In the six-month period, 31.220 billion manat (≈18.43 billion USD) in transactions were repo/reverse repo deals, with 2,772 deals on government bonds valued at 19.254 billion manat (≈11.35 billion USD). The second largest share involved 169 deals with corporate securities totaling 11.854 billion manat (≈7 billion USD).

In the first half of the year, 12,299 transactions worth 1.564 billion manat (≈923 million USD) involved corporate securities, of which 10,028 were shares (181.3 million manat, ≈107 million USD) and 2,271 were corporate bonds (1.383 billion manat, ≈815 million USD). This shows that Azerbaijan's stock market remains underdeveloped.

The Ministry of Finance has used domestic bond issuance to support the market, but the Chamber of Accounts notes that this has not successfully expanded the investor network. Most bonds are purchased by existing investors or entities funded by the state budget. Short average maturities and high domestic borrowing create refinancing risks for future periods.

For example, in 2024, the volume of Central Bank notes in circulation decreased by 1.112 billion manat (≈656 million USD), while the total securities market volume increased by 1.864 billion manat (≈1.1 billion USD), entirely due to government bonds.

Since September 2025, the Ministry has resumed issuing government bonds, carrying out eight placements through the Baku Stock Exchange, which is expected to boost transaction volumes by year-end.

EBRD entry and significance

Now, a foreign player like the EBRD is entering the Azerbaijani securities market. On October 1, the Baku Stock Exchange confirmed the successful placement of the EBRD-issued bonds.

This issuance is seen as a vote of confidence in the Azerbaijani manat, particularly amid concerns over declining oil prices and limited state budget growth that could pressure the exchange rate.

From a financial perspective, this marks two major milestones:

First-time international issuance in manat: An AAA-rated institution issuing bonds in national currency for local investors is a strong indicator of liquidity and transparency in Azerbaijan's capital market. This may pave the way for other international issuers to enter.

Floating interest rate: The bonds' profitability will not be fixed but tied to the AZIR index, reflecting short-term interbank rates. This introduces floating-rate bonds to the Azerbaijani market for the first time.

The EBRD issuance is thus a major step in strengthening Azerbaijan's capital market and demonstrating international confidence in its financial instruments.

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