Kazakhstan planning to issue $1 billion of Eurobonds in 2013

Kazakhstan plans to turn to the market of sovereign bonds in 2013 issuing bonds worth $1 billion, according to the country’s Finance Minister Bolat Zhamishev. Back in 2007 Kazakhstan repaid the last issue of 7-year Eurobonds worth $350 million. The Government was considering issuing Eurobonds worth $500-700 million in 2010 but later abandoned the plan following an agreement to obtain a loan of $1 billion from the World Bank to finance development programs. At that time the Finance Ministry announced that to finance the budget deficit and to support the local stock market internal borrowing would be prioritized, notably, through government securities for pension funds to invest into. “Against the backdrop of low interest rates and the stable macroeconomic situation in Kazakhstan, we believe it possible to issue sovereign Eurobonds in the H1 2013 to finance the budget deficit and set a benchmark for Kazakhstan’s issuers”, he told a government sitting January 29. According to him, the estimated 2013 budget deficit stands at $5.2 billion (2.1% of the country’s GDP). Plans are there to finance the budget deficit through issuing securities worth $3.5 billion at the local market, and securities worth $1.6 billion at the external markets. Following the planned issue of Eurobonds worth $1 billion, external government debt will stand at $5.4 billion (24.2% of the overall government debt). As of January 22, 2013, the cost of borrowing from external markets through 5-year Eurobonds stood at 2.01%, whereas the cost of borrowing from the internal market through 5-year government securities stands at 5.5%.