$2.5 billion adds to Kazakhstan's external debt

Kazakhstan's foreign debt has risen $2.5 billion after the Ministry of Finance of Kazakhstan issued two types of Eurobonds, Tengrinews reports.

A Eurobond is an international bond denominated in a currency other than that of the country where it is issued.

According to the Kazakhstan Stock Exchange (KASE), Kazakhstan has placed two euroissues totally amounting to $ 2.5 billion.

"The Kazakh government represented by the Ministry of Finance of Kazakhstan offered 10-year Eurobonds in the amount of $1.5 billion and 30-year Eurobonds worth $1 billion," KASE informed. The funds raised will be used to close the hole in the national budget.

Aivar Baikenov, Director of Research Department of Asyl Invest says that the placing itself was not so much about attracting additional funds but more of setting up a course.

“Previously there were no Kazakhstan Eurobonds on the market, which is why our corporate bonds had no reference point they could be guided by to somehow evaluate their possible profit. But now, when there are sovereign Eurobonds, any other issuer can enter the market of Eurobonds and see at what profit the government bonds are traded. After the crisis, access to the external market was closed for many issuers. Now the interest in foreign markets is gradually returning, taking into account the fact that the cost of funding in Kazakhstan is becoming higher, especially after the devaluation," the analyst said.

Baikenov also claims that the increase in Kazakhstan’s foreign debt by 2.5 billion is not critical. Currently, Kazakhstan’s foreign debt is at $151.2 billion (rising from $148.7 billion).

The speaker added that the placements of Eurobonds would affect internal government debt of Kazakhstan on government securities. "Potentially, there may be internal borrowing, that is, domestic borrowing can be reduced," he said.
 
Reporting by Azhar Ashirova, writing by Dinara Urazova