KazMunayGas to allocate $500 million for buying back its bonds

KazMunayGas, the national oil company in Kazakhstan (KMG), has notified holders of its bonds with a maturity date in 2025 about repurchasing them for $500 million.

«KazMunayGas is notifying shareholders about early redemption of bonds with a maturity in 2025 for $500 million (the coupon rate of 4.75%),» the company said in a statement.

The company also said that the debt on these bonds will be paid on April 24, 2023. Bondholders are expected to receive principal debt plus yield (accrued before April 24) and redemption premium.

As of December 2022, the total debt of KMG was about $9 billion, a 3.2% increase over the previous year. This data includes half of the oil produced by KMG Kashagan B.V. before September 15, 2022, and 100% of oil output after this date. In September 2022, KMG acquired the remaining 50% of the company, which controls 16.88% of the Kashagan project. At the time, KMG placed bonds worth $1.6 billion with a coupon rate of 3% and maturity in 2035. Samruk Kazyna, the parent company of KMG, bought all these bonds.

Concerning bonds with maturity in 2025, which KMG is going to repurchase this month, they were placed on the London Stock Exchange (LSE) in 2018. As of December 2022, the company’s debt associated with these bonds was about $520.9 million. Yield on these bonds is relatively low: in 2017, KMG placed bonds on the LSE twice: for $1 billion with maturity in 2027 and the coupon rate of 4.75% and $1.25 billion with the coupon rate of 5.75% and maturity in 2047. In 2018, the company carried out three bond issues: $500 million with the coupon rate of 4.75 and maturity in 2025, $1.25 billion for 5.375% per coupon and maturity in 2030 and $1.5 billion with a maturity in 2048 and the coupon rate of 6.375%.

In 2019, the oil company raised $125 million at the Astana International Financial Center at 5% and with maturity in 2024. In 2020, KMG raised $750 million in London at 3.5% and maturity in 2033. In addition, the company raised $1.6 billion at the KASE at 3% (effective rate of 3%) with maturity in 2035. As of December 2022, the company’s debt on bonds was about $7.3 billion in total.

During the IPO in December 2022, KMG placed 3% of its shares. By now, Samruk Kazyna, the National Bank and minority shareholders control 87.42%, 9.58% and 3% of the company’s shares, respectively.