ANALYSIS: In April GS market on KASE experienced not best times on the background of increased demand for tenge

/IRBIS, Ruslan Dzubaylo, Andrey Tsalyuk, May 11, 07/ - In April 2007 on Kazakhstan stock exchange (KASE) 116 deals were registered in government securities (GS) purchase and sale sector for the total of KZT76,479.0 m. (equivalent of $628.0 m.), which was 2.5% out of the total exchange turnover of the month (in March - 4.4%). Relative to March 2007 the sector's turnover decreased by 33.9% in tenge (32.6% in dollar terms), relative to April 2006 - by 11.1% in tenge expression and 16.4% in dollar equivalent. In the primary market sector Ministry of Finance held on KASE three specialized trades for re-offering of MEKAM. On April 13 the Ministry of finance executed on KASE so-called repeated opening (re-offering) of MEOKAM-36 of 63 issue (KZK2KY030635, MOM036_0063; KZT1,000, January 13, 06 - January 13, 09, semi annual coupon, 3.35% APR, 30/360), for the amount of the face value of KZT4.0 bn. with payment at the day of deals' making. Demand had reached 347.5% out of the announced volume of offering and was formed exceptionally by banks. Only 2 deals were executed for offering of 600.0 th. bonds for a total of KZT581.8 m. or equivalent of $4,776.7 th. While term ahead of repayment was 630 days, bonds had been offered under 5.70% APR. By results of the specialized trades, the issuer offered less than 15% of the announced volume. On April 20 the Ministry of finance tried to conduct on KASE the re-offering of MEOKAM-84 of 7 issue (KZK2KY070078, MOM084_0007; KZT1,000, October 12, 04 - October 11, 11, semi annual coupon, 5.70% APR, actual/365), for the amount of KZT3.4 bn. in nominal debt expression at the settlement scheme T + 0. Not any bid was submitted during trades, which the employees of exchange connect with very late notification about holding of an auction from the side of Ministry of finance. On April 27 the Ministry of finance executed on KASE the auction on offering of MEUJKAM-72 of the first issue (KZKAKY060010, MUJ072_0001; KZT1,000, April 27, 07 - April 27, 13, 11, fixed annual coupon, 30/360) on which it planned to offer bonds for amount of KZT12.1 bn., with settlements at the day of deals' making. The subject of traded was so-called fixed coupon (margin under inflation). Demand did not exceeded 95.0% from announced volume of offering. By results of trades the fixed coupon was determined in size of 0.05% APR and Ministry of finance by 9 deals had borrowed to the budget KZT9.6 bn. (equivalent $80.0 m., 80% from planned volume), by selling of 9,600,000 bonds under prognostic yield 7.81% APR with term till maturity 2,160 days. Resuming the above mentioned, it should be noted that the conjuncture of exchange primary GS market in April did not change. It was still determined by pertinacity of sides and as consequence the volume of offerings which had significantly yielded the planned. But ministry of finance managed to increase the amount of borrowings two times compared to March due to selling of MEUJKAM indexed on inflation, which traditionally are under increased demand from the side of accumulative pension funds. In the secondary market sector the volume of exchange operations with GS decreased relative to March almost two times. The main reason for it the analysts of IRBIS find in problems with short-term liquidity, sharply felt on the market. The conduction of tax payments by results of the quarter and payment of annual bonuses to labor collectives had formed on the market the high need in tenge. It from one side had lead to growth of price of short money, fully confirmed by dynamics of exchange indicators (TONIA, KazPrime-3M), from the other side had pulled upward the yield of notes of National bank on the secondary market, from the third -made National bank in April to decrease more than twice the emission activity on the market of notes. The stake of exchange turnover in total volume of purchase and sale deals of GS secondary market of Kazakhstan grew to 36.3% in April (in March it totaled 28.9%). Statistical indicators of this sector 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 - 88.6% (97.7%) of the market ----------------------------------------------------------------------------- less 8 1.00 5.00 2.01 1.89 (2.94) 9,125.6 12 8 - 14 3.70 4.65 4.50 4.56 (3.73) 13,788.7 12 15 - 28 4.30 4.90 4.50 4.61 (4.52) 21,966.6 16 29 - 36 5.20 5.21 5.21 5.20 ( -) 5,323.5 5 37 - 42 5.41 5.41 5.41 5.41 ( -) 249.6 2 43 - 56 5.41 5.41 5.41 5.41 ( -) 1,687.7 1 57 - 63 5.17 5.17 5.17 5.17 ( -) 545.4 1 64 - 91 5.33 5.45 5.45 5.40 (5.06) 5,389.0 7 92 - 181 5.60 5.95 5.63 5.89 (5.70) 664.1 7 -------------- ----- ----- ---- ----------- ------------------ -------- Total 58740.1 (108965.5) 63(83) ----------------------------------------------------------------------------- Coupon GS (KZT): MEOKAM, MEUKAM - 11.4% (2.1%) of the market ----------------------------------------------------------------------------- less than 730 5.80 6.20 5.94 5.97 (5.83) 550.3 7 731 - 1095 6.05 6.20 6.20 6.11 (7.01) 3,381.6 7 1096 - 1460 6.10 6.40 6.16 6.14 (5.94) 1,738.6 7 1461 - 1825 5.49 6.20 5.49 5.96 (5.50) 1,295.2 4 more than 2191 3.00 10.00 5.34 6.09 (6.11) 588.7 15 -------------- ----- ----- ---- ----------- ------------------ -------- Total 7554.3(2281.3) 40(24) ----------------------------------------------------------------------------- Coupon GS (USD): bonds of Astana city - 0.01% (0.002%) of the market ----------------------------------------------------------------------------- less than 730 9.50 9.50 9.50 9.50 (6.63) 2.8 2 -------------- ----- ----- ---- ----------- ------------------ -------- Total 2.8(5.8) 2(4) -------------- ----- ----- ---- ----------- ------------------ -------- GRANDTOTAL 66297.2(111252.6) 105(111) ----------------------------------------------------------------------------- [2007-05-11]