ANALYSIS: Growth of issue activity of the National Bank of Kazakhstan in GS market in May in 2006 did not cause increasing of GS turnover on KASE

/IRBIS, Aslan Juassov, Andrey Tsalyuk, June 5, 06/ - In May in 2006 on Kazakhstan stock exchange (KASE) in the sector of GS purchase-sale 132 deals were registered to total sum of KZT44,855.4 m. (equivalent - USD366.8 m.), that made 3.5% from the whole of exchange's turnover of the month (in April - 5.5%). As regards April of 2006 turnover of the sector reduced by 34.9% in tenge and by 32.6% in USD. In the primary market sector the Ministry of Finance held two specialized trades on offering of its liabilities. On May 24 in KASE's trade system over offering of МЕОКАМ-48 of KZK2KY040329 issue was held (MOM048_0032; KZT1,000, KZT12.0 bn. after over offering, February 10, 04 - February 9, 08, semi-annual coupon 6.00% APR, actual/365). As a result of over offering the Ministry of Finance by 24 deals earned KZT10,577.2 m. into the budget or equivalent of USD86.3 m. under 3.02 - 3.75% APR. On May 31 by single trade МЕUКАМ-120 of KZKDKY020011 issue were offered (MUM120_0001; KZT1,000, KZT5.0 bn., May 31, 06 - May 31,16, annual coupon 5.50% APR, 30/360). At auction fixed coupon interest rate of bonds was determined, and the Ministry of Finance by 19 deals earned KZT5,000.0 m. or equivalent of USD41.2 m. As regards April of current year turnover of GS primary market on KASE decreased by 32.1% in tenge or by 29.6% in USD. In the sector of purchase-sale of the secondary market 89 deals were held to total sum of KZT29,278.2 m. ($221.1 m.). As regards April of 2006 turnover of this sector of the market decreased by 36.2% in tenge or by 39.1% in USD. Statistical indicators of the sector of purchase-sale of Kazakhstan GS in May and the structure of turnover of the secondary market are given in the table (in parenthesis - comparable indicators of the previous month). -------------------------------------------------------------------------------- Yield to maturity for the buyer, % APR Term till -------------------------------------- Volume, m. maturity, on the tenge at the Number days min. max. last deal WA market cost of deals ------------ ------ ----- ---------- -------------- ------------------- -------- Discounted GS (KZT): МЕККАМ, notes of the National Bank - 65.2% (80.9%) of the market -------------------------------------------------------------------------------- under 8 1,20 2,50 1,44 1,88 (1,37) 2,249.5 11 8 - 14 1,50 2,57 2,19 2,34 (2,57) 659.5 5 15 - 28 1,95 3,02 2,70 2,72 (2,36) 17,351.7 29 29 - 36 2,30 2,59 2,30 2,48 ( -) 129.7 3 37 - 42 2,40 2,57 2,55 2,53 ( -) 152.8 3 43 - 56 2,30 2,30 2,30 2,30 ( -) 743.5 6 57 - 63 2,24 2,24 2,24 2,24 ( -) 22.4 1 ------------ ------ ----- ---------- -------------- ------------------- -------- Total 21,309.1 (37,128.0) 58 (70) ------------ ------ ----- ---------- -------------- ------------------- -------- Coupon GS (KZT): МЕОКАМ - 28.1% (18.0%) of the market -------------------------------------------------------------------------------- under 730 2.35 3.50 3.50 3.28 (2.73) 2,436.0 12 1096 - 1460 2.80 3.19 3.10 3.02 (2.99) 2,958.8 6 1461 - 1825 4.10 4.10 4.10 4.10 ( -) 160.1 1 over 2191 3.80 4.10 4.05 4.05 (4.18) 2,406.9 6 ------------ ------ ----- ---------- -------------- ------------------- -------- Total 7,961.1 (8,79.7) 25 (37) ------------ ------ ----- ---------- -------------- ------------------- -------- Coupon GS (USD): bonds of Atyrau region, Astana city - 5.6% (0.2%) of the market -------------------------------------------------------------------------------- under 730 4.00 6.00 6.00 5.38 (5.98) 7.28 5 ------------ ------ ----- ---------- -------------- ------------------- -------- Total 7.28 (72.9) 5 (2) ------------ ------ ----- ---------- -------------- ------------------- -------- Euro notes of Kazakhstan: 1.1% (0.9%) of the market -------------------------------------------------------------------------------- under 730 5.00 5.00 5.00 5.00 (5.55) 0.1 1 ------------ ------ ----- ---------- -------------- ------------------- -------- Total 0.1 (425.6) 1 (1) ------------ ------ ----- ---------- -------------- ------------------- -------- GRAND TOTAL 29,278.2 (45,906.2) 89 (110) -------------------------------------------------------------------------------- The stake of turnover in total volume of purchase-sale deals of Kazakhstan GS secondary market in May in 2006 decreased till 68.1%. In April it made 73.7%. As it has been already informed, issue activity of the issuers of Kazakhstan GS (more precisely, of the National Bank of Kazakhstan) in May noticeably increased, though the main volume of offerings passed beyond KASE. As per data, which IRBIS possesses, the volume of notes issue of the National Bank in May at sums of offering reached KZT317,438.0 m., whereas in the previous month it did not surpass KZT230,061.4 m. In May total net- borrowing balance of all Kazakhstan issuers of GS, including local executive bodies, is estimated by IRBIS as positive 95,966.4 m. tenge (corresponding indicator of April is positive KZT54,514.9 m.). Nevertheless, all these did not reflect themselves positively on exchange's turnover of the secondary market. Offered МЕКАМ are bought, mainly, by pension funds of the country, which they prefer keeping till maturity. And excessive tenge liquidity in the market does not promote the growth of the secondary resale of notes, taking into account very low interest of "pension subjects" to bonds of this type. Due to mentioned reasons the GS secondary market on KASE for analyzed month was weak. A bit augmentation of yield of bonds in tenge in it the analysts of IRBIS are inclined to explain it as growth of yield of notes at primary auctions, and also growing inflation. In June specialists of IRBIS are waiting nothing new from Kazakhstan GS market. [2006-06-05]