Kazakhstan government returns to bonds with $2.5bn debt sale

 
Joseph Millis
OIL-RICH Kazakhstan yesterday announced it was selling 10-year and 30-year US dollar debt to investors, marking the central Asian state’s return to the bond market after a break of more than 14 years.

Russia’s neighbour, which is also a major exporter of industrial metals, uranium and grain, will price the 10-year paper at an implied yield of roughly 4.05 per cent and the 30-year paper at an implied yield of about 5.1 per cent.

Combined orders from investors topped $11bn (£6.85bn), said the Wall Street Journal, allowing the banks involved in the deal to set the size of the shorter at $1.5bn and $1bn on the longer, broadly in line with market expectations.

These deals mark the first from the central Asian country since April 2000, when Kazakhstan – which has an S&P credit rating of BBB+ – sold $350m of debt that matured in 2007.

Plans for the country to return to the bond market surfaced last year, when finance minister Bolat Zhamishev said that Kazakhstan was aiming to borrow up to $1bn and asked banks to apply for mandates.

Last week, HSBC, Citigroup and JP Morgan hosted a series of investor meetings in London, New York, Boston and San Francisco and Los Angeles which sources said were well-attended.

“Kazakhstan’s credit metrics are generally strong. In particular, the government has a strong balance sheet and low liquidity requirements,” said Alex Kozhemia­kin, head of emerging-market debt at Standish Mellon Asset Management, which has $162bn of assets under management.

He added that the yield, even on the 30-year, compensated for risks stemming from the potential decline in oil prices, as well as “the banking system still being burdened by high non-performing loans”.

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