Freedom Bank to boost lending with $195 million bond issue

Freedom Bank Kazakhstan is set to issue $195 million in bonds as part of a new bond program, aiming to place half of the total value in two stages by the end of 2024. The funds raised will be used to finance corporate lending in the real sector of the country’s economy, according to Farhat Sarsekeyev, the bank’s managing director, who announced the plan during Issuer Day at the Kazakhstan Stock Exchange (KASE).

«Since mid-2024, Freedom Bank Kazakhstan has entered the corporate lending market. We currently serve 51,000 corporate clients and have several projects we plan to finance. To support these efforts, we have registered a 100 billion tenge bond program and are conducting a roadshow,» Sarsekeyev said.

Yerzhan Orynbekov, head of the trading department of Freedom Bank Kazakhstan, added that the bonds will have a seven-year maturity. The first tranche, worth 20 billion tenge (approximately $39 million), has already been included in KASE’s trading lists on Dec. 4. A second tranche, worth $58 million, is scheduled to be issued before the end of 2024, with the remaining $97 million planned for 2025.

The bonds will also be open to individual investors, with coupon payments made semiannually. The coupon rate, tied to the inflation rate over the past six months, includes a 2.5% risk premium along with an additional 4.65% premium. As of Dec. 1, the total coupon rate stands at 15.07% per annum.

Sarsekeyev noted that loans raised through the bond program will not be issued to individual entrepreneurs but will be exclusively available to limited liability companies and joint-stock companies.

The bank will not use the raised funds to finance the following sectors:

• Residential and commercial construction.
• Automobile and motorcycle repair.
• Wholesale and retail trade.
• Financial and insurance activities.
• Real estate operations.
• Legal and accounting services.
• Management.
• Advertising.
• Gambling.
• Activities of households that employ domestic workers and produce goods for personal consumption.

«At the same time, there is an opportunity to participate in the state program administered by the Damu Entrepreneurship Development Fund, which focuses on supporting five key sectors of the economy. These priority sectors are manufacturing, medicine, education, tourism, transportation and logistics,» Sarsekeyev explained.

As of Dec. 1, the bank has received applications for loans under its credit-for-investment instrument (through bond issuance) totaling $216.7 million.

The bank’s managing director highlighted the strong demand for financing from businesses and mentioned plans to fully digitize all services for corporate clients in the future.

Freedom Bank is currently ranked eighth among Kazakhstan’s 21 banks. As of Oct. 1, the bank’s equity reached nearly $340 million, marking a 25% increase since the start of the year. Assets grew by 8%, reaching $4.9 billion, while net profit amounted to $53.4 million. The bank’s loan portfolio expanded by 9.8%, totaling $1.4 billion since the beginning of the year. Deposits from legal entities rose by 25% to $683 million, while deposits from individuals increased by 9.6%, reaching $1 billion.