YEREVAN, Feb 2 (Reuters) - Armenia plans to issue Eurobonds this year, the finance ministry said on Monday, to help offset the effects of the economic crisis in its key trade partner, Russia.
Armenia, a former Soviet state of 3.2 million people, is closely tied to Russia through trade and remittances, and the recent sharp fall in the rouble, dragged down by weak oil prices and Western sanctions over Ukraine, has pulled the Armenian dram down with it.
The dram was trading at around 474 to the dollar on Monday, compared to just 407 drams a year earlier.
"It's necessary to secure an inflow of capital in foreign currency to neutralise the negative effects of the (situation in the) global economy," the ministry said in a statement.
International law firm Cleary Gottlieb Steen & Hamilton LLC will act as an international consultant for the issue, while Deutsche Bank, HSBC Bank and JP Morgan will be the underwriters.
Armenia is a member of Russian President Vladimir Putin's Eurasian Union, which he hopes will rival the European Union. Its only previous Eurobond was a 7-year issue worth $700 million in September 2013.
Moody's downgraded Armenia's bonds to a rating of Ba3 from Ba2 in January, changing its outlook to negative from stable. It cited declining remittances, uncertain foreign investment, exchange rate volatility and pressure on foreign exchange reserves. (Reporting by Hasmik Mkrtchyan; Writing by Margarita Antidze; Editing by Gabriela Baczynska and Kevin Liffey)