Analysts cautiously consider plans of Kazakhstan companies to issue eurobonds

/IRBIS, Feb 12, 01/ - According to the Reuters, Kazakhstan companies have turned their view on international capital market this year. Analysts are skeptic about risk evaluation and investors' confidence to new bonds. Representative of Gesellschaft Fuer Wertpapiersparen claimed that he would rather buy Russian bonds of LUKOIL or GAZPROM than bonds of Kazakhstan issuers. Among companies preparing for entrance to the international capital markets is a rail road carrier, Kazakhstan Temir Zholy. The company has already prepared $150 mln issue of eurobonds for its fifth anniversary. KazTransOil, monopolist of oil pipeline transportation, is reported, to be ready to issue $100 mln in eurobonds. KazTransGas is also looking for investors. In January this year, Finance Minister, Mazhit Esenbayev reported that Kazakhstan would borrow $300-350 mln in eurobonds. The activity is rising, yet the analysts are concerned that risks are high, while the government support is not guaranteed despite some close links to the government. Some international investors have already made mistakes in Russia in 1997 considering this government support. In this respect, Kazakhstan companies are considered to have close links to the government as they are mostly presented by natural monopolies. Investors are also worried by too tight relations between government and the industry considering important dependence of the economy from transportation. Kazakhstan has BB- speculative rating of Standard & Poor and B1 of Moody's Investors Service. At the same time, profitability of Kazakhstan eurobonds issue with 2008 maturity term exceeds Mexico investment rating only by 50 basic points. Analysts suggest that Kazakhstan companies would hardly accept interest rates that are higher than sovereign debt rates of Kazakhstan itself. Thus, bonds of Kazakhstan companies are becoming expensive and risky instrument.