Kazakhstan readying first 'euro-clearable' local currency bond

Kazakhstan hopes to sell its first "euro-clearable" bond denominated in its own currency this year, as well as a yuan-denominated "panda" bond, the country's finance minister told Reuters. After a turbulent few years that culminated in an economic slump and a currency crisis, oil producer Kazakhstan is being buoyed again by the sharp rebound in crude prices.
The government hopes that its Astana International Financial Center, currently under development as a Dubai-style banking and trading hub for central Asia, will be boosted by the listing of an international bond in tenge, Sultanov said. "The country was very active in 2014 and 2015 with international issuances of dollar Eurobonds and now the government is studying very carefully the possibility of local-currency international bond issuance," Finance Minister Bakhyt Sultanov said on the sidelines of EBRD's annual meeting in Jordan. "That is really the priority for this year."
He said it was still too early to think about how big the bond would be, or its maturity. But what should catch investors' attention is that it is likely to be the first Kazakhstan government bond denominated in the local currency, the tenge, that is eligible for settlement via Euroclear, an international post-trade services system, making it easier for foreign investors to buy and sell the securities.
Sultanov wants to ensure a more diverse investor base, hoping that financing might stay around longer when future downturns come. The country burnt through almost $30 billion of reserves trying halt a plunge by the tenge before it eventually floated the currency in mid-2015.
Last year, though, more than $20 billion of foreign direct investment has returned, Sultanov said. "That is why it is import to diversify the investor base so that is why the country is looking at new instruments such as local currency bonds as well as sukuk and Panda bonds."
A panda bond is a bond denominated in Chinese yuan, sold in China by a non-Chinese issuer. A sukuk bond targets Islamic investors because they are deemed to be compliant with Shariah law.