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Pricing GEL Inflation-Linked Bonds Using USD Benchmark
Dedollarization is a priority topic on the agenda of many policymakers and financial institutions. One efficient way to develop local currency market at a reasonable price could be an inflation indexation. TBC Research team is working on this topic to explore the opportunities in Georgia and also in the broader region.
This publication reflects analysis conducted as of March 2018. Publication attempts to arrive at a potential price for GEL inflation-linked bonds using the USD bond yields as a benchmark.
The results suggest, that based on international practice, inflation-linked GEL price would be much more reasonable as compared with the nominal one and therefore an inflation-indexation should contribute to the development of local currency markets and more efficient and resilient financial systems.
We would be thankful for comments and suggestions for the finalization of the research and the practical implementation of inflation-linked bank products.