Kazakh state-owned companies to issue 30-yr bonds-deputy PM
Oct 22. Reuters. LONDON
By Silvia Antonioli
* National companies auction will finance “huge” project spending
* Transfer to “Bad Loan Fund” to reduce banking NPLs by 10 pct in 5-7 years
* Kazakh government to sell stakes in banks as soon as possible
Kazakh state-owned companies including railway monopoly Kazakhstan Temir Zholy (KTZ) and oil and gas firm KazMunaiGas (KMG) will likely issue 30-years bonds in the second quarter of 2013, the country’s deputy prime minister told Reuters.
“I think next year the national companies could come to the market with 30 years bonds,” deputy prime minister Kairat Kelimbetov said in an interview this week.
“Among these, there could be KTZ and KMG. This will likely happen in the second quarter of 2013.”
He added that the results of the latest KTZ auction was encouraging, with 30-year bond rates at a little more than 5 percent, a good result in comparison with similar auctions in other central Asian countries.
Kazakhstan is the largest economy in central Asia.
To help these auctions, the Kazakh government is planning to issue Eurobonds next year following a recent restructuring deal of sovereign wealth fund-owned bank BTA’s debt, Kelimbetov said during the 3rd Kazakhstan Business Form.
The issue should provide a benchmark for the separate debt issuance of state-owned companies which need funds to finance new projects, the government official said.
“After five years out of the debt markets because of the very difficult situation caused by the banking crisis, we want to come back to issue bonds next year in order to establish a benchmark; but it will be a very small auction,” the deputy-prime minister said.
“It’s not because of problems financing our deficit, it’s more for the national companies to get funding for financing huge industrial and infrastructure projects which will be developed in the next decade.”
FIX AND SELL
Kazakhstan’s government is planning to transfer some Non-Performing Loans (NPLs) held by the local banks to a central bank-managed “Bad Loans Fund”.
The deputy prime minister put the total amount of NPLs in the Kazakhstan banking sector at around 20 percent, currently.
“Probably we will transfer some of the NPLs into this non-performing assets fund that we have just established and within 5-7 years I think this will reduce the overall share of NPLs within the general banking portfolio by 10 percent,” Kelimbetov.
“Both state-owned banks and private banks will be shareholders of this fund.”
The government also aims at selling as soon as possible its stakes in the three banks it currently controls: BTA, Alliance Bank, Temir Bank.
Although market conditions are currently very difficult, these could represent good opportunities for big Russian and Chinese banks, Kelimbetov said.