The regulatory framework of the Georgian securities market and the government's efforts to foster the development of financial markets have undergone significant changes in the past decade. This includes major reforms in currency issuances, brokerage licensing, anti-money laundering (AML), and compliance practices, alongside compulsory pension reform, the introduction of investment fund and covered bond laws. Currently, the European Union (EU) candidacy is playing a pivotal role as a driver to align the capital market infrastructure with the best practices of Europe.
 

Over the past five years, the local bond market in Georgia has experienced rapid growth. In 2023, the local bond market doubled, reaching 2.1 billion GEL in outstanding public bonds. Additionally, secondary market transactions have surged, with the total Assets Under Management (AUM) of Georgian brokerages reaching 4.3 billion GEL, and Over-The-Counter (OTC) turnover approaching 1.3 billion GEL in the same year on the TBC Capital’s books.
 

This growth can be attributed to the interest shown by Georgian corporations across various industries. Currently, there are 11 unique issuers from 8 industries, compared to 5 issuers from 3 industries in 2018. Their primary objectives include refinancing existing liabilities (such as previously outstanding bonds and bank loans) with better financial terms, optimizing cash flows, and reducing the share of collateralized assets on their balance sheets.

The local market has demonstrated that interest rates on local bonds are at an optimal level compared to bank loan rates, deposits, and rental yields, providing an appealing alternative for both issuers and investors. It is evident that bonds with an average maturity of two years are of primary interest to both issuers and investors.

We anticipate this growth trajectory to continue in the coming years, with our proprietary forecast indicating the local bond market reaching 5.4 billion GEL by 2026. Moreover, we project the total securities holdings from Georgian households to grow from the current 2 billion GEL to 6 billion GEL by 2026.