ANALYSIS: In September 2006 GS secondary market of KASE was developing under conditions of excessive offering of bonds

/IRBIS, Ruslan Dzubaylo, Andrey Tsalyuk, October 6, 06/ - In September 2006 on Kazakhstan stock exchange (KASE) 137 deals were registered in government securities (GS) purchase and sale sector for the total of KZT63,337.9 m. (equivalent of $501.3 m.), that was 3.1% out of total exchange's turnover of the month (in August - 4.9%). Relative to August 2006 the sector's turnover decreased by 37.9% in tenge expression and by 39.2% in dollar terms. In the secondary market sector Ministry of finance carried out three specialized trades on finishing the offering of MEOKAM. On September 20 the repeated re-offering of KZK2KY040337 issue MEOKAM-48 (MOM048_0033; KZT1,000, March 2, 04 - February 29, 08, semi-annual coupon, 6.0% APR, actual/365) took place. Bids made 163.3% out of the announced volume of re-offering. 14 deals were made on re- offering of 14,392,000 bonds for the amount of borrowing at $114.3 m. Bonds were offered at duration of 528 days under 3.70-6.00% APR. Weighted average profitability of the re-offering made 5.90% APR to maturity for a purchaser. After carried out trades the volume of KZK2KY040337 issue reached 16,386,608 bonds. On September 27 and 29 the re-offering of KZK2KY060061 issue MEOKAM-72 (MOM072.006; KZT1,000, January 3, 04 - January 11, 10, semi-annual coupon, 6.10%, actual/365) was carried out in the trading system of KASE. Bids at auctions were varied from 156.9% to 719.0% out of the offered volume. As a result of the re-offering Ministry of finance borrowed to the budget KZT17,454.6 m. or equivalent of $137.3 m. within 31-st deal, having purchased 17,400,000 bonds at 4.10-7.49% APR to maturity at duration of 1,200 - 1,202 days. Weighted average profitability of the re-offering made 6.42% APR The total volume of the exchange deals of the primary GS market on KASE reached in September KZT31,913.0 m. or equivalent of $251.7 m.In august the correspondent indicators were equal to KT36,665.7 m. and $295.7 m. In the secondary market sector the stake of the exchange turnover to the total volume purchase and sale deals on GS Kazakhstan secondary market in September decreased by 65.7% (in August it totaled 98.6%). As well as in August the factors, influential on the conjuncture, were relatively high issue activity of Ministry of finance and National bank while offering the new securities and also limitation of banks in free tenge, provoked by speculation in tenge at the domestic dollar market and by performance of the new reserve requirements. Against the background of growing repo rates all above-mentioned led to prevail of GS offering over its demand, and resulted in advantageous growth of governmental bonds on the secondary market. Statistical indicators of GS purchase-and sale sector in September and the structure of turnover of the secondary market are given in the table (in parentheses - comparative indicators of the previous month). ------------------------------------------------------------------------------- Yield to maturity for the buyer, %APR -------------------------------- Term ----- ------ ---- ----------- Volume, m. KZT Number till maturity min max last WA at market price of deals -------------- ----- ------ ---- ----------- ------------------- -------- Discounted GS (KZT): National Bank's notes - 79.1% (74.8%) of the market ------------------------------------------------------------------------------- less 8 1.59 3.10 3.00 2.99 (2.44) 1,224.7 4 8 - 14 1.50 4.60 4.60 3.96 (2.80) 1,928.0 5 15 - 28 3.34 4.05 4.05 3.82 (3.55) 21,699.2 18 -------------- ----- ------ ---- ----------- ------------------- -------- Total 24,851.9 (48 799.8) 27 (52) -------------- ----- ------ ---- ----------- ------------------- -------- Coupon GS (KZT): MEOKAM, MEUKAM - 15.5% (24.6%) of the market ------------------------------------------------------------------------------- less than 730 3.50 4.36 4.09 3.60 (3.95) 793.8 14 731 - 1095 3.72 5.00 3.75 3.77 (3.52) 1,290.6 15 1096 - 1460 3.70 109.53 3.99 6.31 (3.68) 1,474.9 19 1461 - 1825 4.23 4.23 4.23 4.23 (5.35) 1.0 1 more than 2191 5.20 8.72 8.72 7.53 (5.11) 1,313.2 5 -------------- ----- ------ ---- ----------- ------------------- -------- Total 4,873.5 (16 083.2) 54 (51) -------------- ----- ------ ---- ----------- ------------------- -------- Coupon GS (USD): bonds of Atyrau oblast and Astana city - 0.01% (0.5%) out of the market ------------------------------------------------------------------------------- less than 730 -0.80 1.00 0.20 0.12 (6.19) 4.0 3 -------------- ----- ------ ---- ----------- ------------------- -------- Total 4.0 (310.2) 3 (19) -------------- ----- ------ ---- ----------- ------------------- -------- Euronotes of Kazakhstan - 5.4% (0.1%) out of the market ------------------------------------------------------------------------------- less than 730 5.20 6.21 5.20 5.71 (5.85) 1,695.5 8 -------------- ----- ------ ---- ----------- ------------------- -------- Total 1,695.5 (71.7) 8 (2) -------------- ----- ------ ---- ----------- ------------------- -------- GRANDTOTAL 31,425.0 (65,264.8) 92 (124) ------------------------------------------------------------------------------- [2006-10-06]