Kazakhstan raised $1.5 billion by issuing its first dollar-denominated ten-year Eurobonds since 2015, according to the Ministry of Finance.
«Kazakhstan has successfully returned to the U.S. dollar-denominated Eurobond market for the first time since 2015 by placing an issue of $1.5 billion for 10 years with a coupon rate of 4.714%,» the ministry stated in a release.
The ministry said the deal was preceded by a one-day virtual roadshow, available only to states with high investment ratings. Over 100 investors from the U.S., U.K., Europe, Asia and the Middle East were consulted during the day, indicating strong interest and investor confidence in Kazakhstan as a reliable issuer in the international capital market.
A key factor in the successful placement was the recent upgrade of the country’s sovereign rating to Baa1 with a «stable» outlook by Moody’s.
«Thanks to the timely offering, the Ministry of Finance was able to secure optimal parameters for both the volume and pricing of the issue. The aggregate order book demonstrated strong growth, reaching nearly $6 billion, which enabled us to establish the coupon rate and yield at 4.714%, with a premium (spread) to U.S. Treasuries of 88 basis points,» said the ministry, highlighting that this spread is among the lowest for developing countries issuing ten-year sovereign bonds.
The 88-basis-point premium is lower than the secondary market rates for several A-rated countries, including Saudi Arabia, Chile and Poland. According to the ministry, this reflects the high confidence of international investors in Kazakhstan’s economic, financial and social policies.
The agency believes this successful issuance will strengthen the country’s financial stability and foster economic growth. The favorable terms of this offering are expected to set a benchmark for other issuers from Kazakhstan, both quasi-governmental and corporate, seeking to tap into international capital markets.
The deal organized by BCC Invest was also supported by Citi, JPMorgan and Société Générale, which served as international partners, joint lead managers and bookrunners for the transaction.
Earlier this week, the finance ministry announced that the bookbuilding process (the collection of bids from potential investors) for the issuance would take place on Oct. 3. Each bond had a face value of $200,000, with a total of 7,500 bonds issued. The indicative coupon rate was set at 4.87%.
Kazakhstan last issued ten-year dollar-denominated Eurobonds in 2015, with a volume of $2.5 billion and a coupon rate of 5.125%. In 2018, the country also issued ten-year euro-denominated Eurobonds, totaling €525 million with a coupon rate of 2.375%.
