Kazakhstan Plans to Sell Bonds Abroad in Autumn, Zhamishev Says

May 14. Bloomberg

By Daryna Krasnolutska and Douglas Lytle

Kazakhstan’s finance minister said the central Asian nation plans to sell between $500 million and $750 million in bonds to investors abroad in the autumn, joining nations such as Russia and Egypt in a return to foreign markets.

The bonds will probably be denominated in dollars and will be used to set a benchmark for corporate borrowing, Bolat Zhamishev said in an interview today in Zagreb. Kazakhstan will start selecting an arranger for the sale next month, he said.

“Our aim is to fix a benchmark for the corporate sector but not to raise money to cover the state budget deficit,” Zhamishev said. “Thus we will not borrow much.”

The sale would represent Kazakhstan’s first foreign- currency bonds in a decade as the largest energy producer in central Asia seeks to lure investors after the global economic crisis forced the government to prop up its banking system and economy.

Russia sold $5.5 billion of bonds on April 22, the second- biggest emerging-market dollar debt offering on record, as the country returned to world capital markets for the first time since defaulting in 1998. Ukraine’s deputy finance minister said on May 12 the country will select a lead manager for a Eurobond sale in one week and is planning to offer as much as $1.3 billion in foreign-denominated debt this year.

Investor demand also spurred Egypt to return to the dollar debt market for the first time in nine years on April 22 as the government sold $1.5 billion of bonds.

Greek Crisis

Since the Russia and Egyptian offerings, the Greek debt crisis has pushed up debt yields and prompted countries such as the Czech Republic to delay plans for Eurobonds. Kazakhstan doesn’t have outstanding foreign-currency bonds, according to Bloomberg data, after it redeemed its last notes in 2007.

Zhamishev also said he does not expect the price of oil to decline “much” and said the economy is advancing.

“Our economy is doing well, expanding more than 7 percent in the first four months of the year from the same period a year ago,” he said. “There are certain risks, though. The banking sector remains risky because of the loan portfolio quality. The construction industry is risky as individual investments shrank and all industries related to construction are risky.”

Kazakhstan’s government wants to cut the budget deficit in 2011, he said, declining to give a specific forecast of how much.

“Next year will be tough,” he said.