ANALYSIS: In June 2008 traders` attention was fixed at GS primary market

/IRBIS, Ruslan Dzubaylo, July 22, 08/ - In June 2008 on Kazakhstan Stock Exchange (KASE) 118 deals were registered in government securities (GS) purchase and sale sector, including offering for the total of KZT57,980.6 m. (equivalent of $480.2 m.), that was 2.0% out of total exchange's turnover of the month (in May - 1.8%). Relative to May 2008 the sector's turnover decreased by 41.6% in tenge and dollar expressions. Relative to June 2007 it decreased by 39.0% in tenge and 38.5% in dollar expressions. Kazakhstan financial market at the beginning f June was characterized by surplus liquidity supply, what reflected in TONIA index, which during the first half of month was at the low level (within 1% APR) and KazPrime index, which in June reached under crisis level. Situation improvement with current payment balance transactions, reaching of export raw and huge foreign financing, borrowed by major production companies contributed to favorable situation on short money market. As a result market participants, having big sum of free money, were ready to invest in low risk instruments on any yield. Ministry of Finance, having used the favorable situation carried out six (!) auctions in June and completed the budget by KZT34.4 bn. on rather low rates. The first auction was on June 4 was held the auction on placement of government short-term treasury obligations of the Ministry of Finance of the Republic of Kazakhstan MEKKAM-9 (KZK1KM090104, MKM009_0010; KZT100, 04.06.08 - 04.03.09, actual/ actual). Bonds` value was the subject of the trade. Initially, KZT8,000.0 m. bonds was planned to borrow. 7 primary dealers participated in the trades, having submitted 15 limited bids. Total volume of active bids (volume of ask) made KZT18,737.1 m.(248.8% from suggested volume of bonds). The yield varied from 7.0199 % APR to 10.0001 % APR, making in average weighted expression 8.3358 % APR. By results of trade, the issuer made cut off price at 94.7851% (7.35% APR), satisfied bids on sum KZT4,882.8 m., (what made 64.3% from suggested volume of bonds). June 11 was held the second auction on placement of government long-term treasury obligations MEUKAM-72 (KZKDKY060017, MUM072_0001; KZT1,000, 11.06.08 - 11.06.14, 30/360), which was declared failed "due to unsatisfactory price built by submitted bids". June 12 was held the repeated auction on placement of government short- term treasury obligations of the Ministry of Finance of the Republic of Kazakhstan MEKKAM-9 (KZK1KM090104, MKM009_0010; KZT100, 12.06.08 - 04.03.09, actual/ actual). Bonds` value was the subject of the trade. Initially, KZT5,000.0 m. bonds was planned to borrow. 10 primary dealers participated in the trades, having submitted 25 limited bids. Total volume of active bids (volume of ask) made KZT40,948.4 m.(870.0% from suggested volume of bonds). The yield varied from 7.25 % APR to 10.00 % APR, making in average weighted expression 8.58 % APR. By results of trade, the issuer made cut off price at 94.9995% (7.25% APR), satisfied bids on sum KZT4,750.0 m., (what made 100.0% from suggested volume of bonds). By the middle of June, National Bank managed to clean the market from surplus liquidity. Over the month the Head Bank borrowed the record volume for the recent 12 months (KZT391.9 bn.). The situation became stable and rates of monetary market went up. As a result, further borrowings by Ministry of Finance were less favorable (concerning rates). June 18 was held the auction on placement of government short-term treasury obligations of the Ministry of Finance of the Republic of Kazakhstan MEKKAM-12 (KZK1KY010893, MKM012_0089; KZT100, 18.06.08 - 18.06.09, actual/ actual). Bonds` price was the subject of the trade. Initially, KZT11,000.0 m. was planned to borrow. 10 primary dealers participated in the trades, having submitted 14 limited bids. Total volume of active bids (volume of ask) made KZT26,619.1 m.(261.5% from suggested volume of bonds). The yield on ask varied from 7.4999 % APR to 8.5000 % APR, making in average weighted expression 8.0577% APR. By results of trade, the issuer made cut off price at 93.0233% (7.4999% APR) rate and satisfied bids on sum KZT310.1 m., (what made 3.0% from suggested volume of bonds). June 23 was held the repeated auction on placement of government short- term treasury obligations of the Ministry of Finance of the Republic of Kazakhstan MEKKAM-9 (KZK1KY010893, MKM012_0089; KZT100, 18.06.08 - 18.06.09, actual/ actual). Bonds` price was the subject of the trade. Initially, KZT5,000.0 m. was planned to borrow. 4 primary dealers participated in the trades, having submitted 6 limited bids. Total volume of active bids (volume of ask) made KZT15,391.3 m.(331.0% from suggested volume of bonds). The yield on ask varied from 7.50 % APR to 8.00 % APR, making in average weighted expression 7.63% APR. By results of trade, the issuer made cut off price at 93.1122% (7.5001% APR) rate and satisfied bids on sum KZT12,415.0 m., (what made 266.7% from suggested volume of bonds) June 27 specialized trades on offering of government long-term treasury obligations of the Ministry of Finance of the Republic of Kazakhstan MEUJKAM-108 of 2nd issue were held (KZKAKY090025, MUJ108_0002; KZT1,000, 27.06.08 - 27.06.17, 30/360). Fixed coupon rate was the subject of the trade. Initially, 12,000.0 bonds were planned to offer. 8 primary dealers participated in the trades, having submitted 5 limited bids. Total volume of active bids (volume of ask) made KZT26,440.0 m.(220.3% from suggested volume of bonds). The rate of fixed coupon varied from 0.01 % APR to 0.90 % APR, making in average weighted expression 0.08 % APR. By results of trade, the issuer made cut off price at 0.01% rate and offered 100.0% from planned bonds` volume. Based on the current value of inflation rate, yield to maturity is estimated at 19.49% APR. Notwithstanding changed situation on monetary market, interest to GS secondary market on the side of traders was minimal. From the current tendencies of secondary market we may note the increased angle of slope of yield curve. short term part of curve is declining on surplus liquidity and its long term part is raising by means of high inflation risks in future. However, it is early to speak about fundamentality of this tendency because GS market (1) very low liquidity and (2) "internal" character deals are prevailed on it. Statistical indicators of GS secondary market in June and the structure of turnover 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): MEKKAM, National Bank's notes - 82.8% (10.5%) of the market ------------------------------------------------------------------------------- less 8 3.50 3.50 3.50 3.50 (8.02) 7,498.6 5 8 - 14 5.70 6.00 5.70 5.74 (7.04) 349.5 2 15 - 28 4.00 8.00 5.76 5.75 (6.44) 5,241.4 8 64 - 91 6.50 6.50 6.50 6.50 (7.20) 181.9 2 92 - 181 7.50 7.50 7.50 7.50 (- ) 6,188.7 4 182 - 364 7.42 7.42 7.42 7.42 (7.42) 111.2 1 --------------- ------ ----- ----- ------------- ---------------- -------- Total 19571.2(1079.2) 22(11) --------------- ------ ----- ----- ------------- ---------------- -------- Coupon GS (KZT): MEOKAM, MEUJKAM, MUIKAM - 17.2% (89.5%) of the market ------------------------------------------------------------------------------- less than 730 3.00 9.29 8.50 8.25 (8.42) 1,655.32 28 731 - 1095 8.00 8.51 8.00 8.20 (8.17) 824.27 7 1826 - 2190 19.37 19.37 19.37 19.37 (18.03) 409.12 2 More than 2191 18.20 25.66 19.43 19.16 (17.66) 1,162.92 7 --------------- ------ ----- ----- ------------- ---------------- -------- Total 4051.6(9203.6) 44(76) --------------- ------ ----- ----- ------------- ---------------- -------- GRANDTOTAL 23622.8(10282.9) 66(87) ------------------------------------------------------------------------------- The stake of exchange's turnover in total volume of purchase and sale deals of Kazakhstan GS secondary market in June made 86.6% (in May - 87.7%).r [2008-07-22]