ANALYSIS: In July 2008 GS market was inactive

/IRBIS, Ruslan Dzubaylo, August 8, 08/ - In July 2008 on Kazakhstan Stock Exchange (KASE) 107 deals were registered in government securities (GS) purchase and sale sector, including offering for the total of KZT40,124.3 m. (equivalent of $333.6 m.), that was 1.4% out of total exchange's turnover of the month (in June - 2.0%). Relative to June 2008 the sector's turnover decreased by 30.5 %. Relative to July 2007 it decreased by 60.0 % in tenge and 59.5 % in dollar expressions. Turnover of GS secondary market in July decreased to minimal value since the beginning of 2008. Many factors contributed to decreasing of activity in this sector of Kazakhstan market. High inflation risks make the most considerable influence. According to data for July, annual inflation in Kazakhstan republic made 19.3%. At that, annual bonds` yield in this sector exceeds 7.50 % (see below). Worsening of situation with short-term liquidity in financial system also contributed to activity decreasing. "Overnight" repo rates grew by 3-4 times in July, what was connected with rather high issuing activity of National Bank of Kazakhstan republic and regular payments in the budget. Total volume of offered notes exceed KZT313 bn. In July Ministry of Finance in its turn borrowed minimum since year beginning volume. Five auctions were carried out, one of which was announced as failed. July 2 was held the first in July auction on placement of government short- term treasury obligations of the Ministry of Finance of the Republic of Kazakhstan MEKKAM-12 of 90th issue (KZK1KY010901, MKM012_0090; KZT100, 02.07.08 - 02.07.09, actual/ actual). Bonds` price was the subject of the trade. Initially, KZT5,000.0 m. was planned to borrow. 10 primary dealers participated in the trades, having submitted 24 limited bids. Total volume of active bids (volume of demand) made KZT37,402.3 m.(805.3% from suggested volume of bonds). The yield varied from 7.4500 % APR to 9.0000 % APR, making in average weighted expression 7.6503% APR. By results of trade, the issuer made cut off price at 93.0233% (7.4999 % APR) rate and satisfied bids on sum KZT4,652.6 m., (what made 100.0% from suggested volume of bonds). July 9 auction on offering government mid-term treasury obligations of Ministry of finance of Kazakhstan republic MEOKAM-24 of 72nd issue (KZK2KY020727, MOM024_0072; KZT1 000, 09.07.08 - 09.07.10, 30/360) were held in KASE's trade system. Coupon rate was the subject of the trade. Initially, KZT7,000.0 m. was planned to borrow. 11 primary dealers participated in the trades, having submitted 23 limited bids. Total volume of active bids (volume of demand) made KZT18,550.0 m.(265.0% from suggested volume of bonds). The yield varied from 7.95 % APR to 9.50 % APR, making in average weighted expression 8.43 % APR. By results of trade, the issuer set the rate of coupon at 8.00% APR and satisfied bids on sum KZT6,666.7 m.(95.2 % from the suggested volume of bonds). July 16 was held the regular auction on offering 3-year term government treasury obligations MEOKAM-36 (KZK2KY030650, MOM036_0065; KZT1 000, 16.07.08 - 16.07.11, 30/360), which was announced failed "due to the unsatisfactory price on submitted orders". July 22 repeated auction on offering government mid-term treasury obligations of Ministry of finance of Kazakhstan republic MEOKAM-24 of 72nd issue (KZK2KY020727, MOM024_0072; KZT1 000, 09.07.08 - 09.07.10, 30/360) were held in KASE's trade system. Net bonds` price was the subject of the trade. Initially, KZT5,000.0 m. was planned to borrow. 6 primary dealers participated in the trades, having submitted 12 limited bids. Total volume of active bids (volume of demand) made KZT241,619.5 m.(4831.9% from suggested volume of bonds). The yield varied from 8.0027 % APR to 8.1531 % APR. By results of trade, the net bonds` price in satisfied bids made 99.99%, what equals to the yield 8.0027 % APR. Issuer satisfied bids on sum KZT6,084.6 m. July 23 repeated auction on offering government short-term treasury obligations of Ministry of finance of Republic of Kazakhstan MEKKAM-12 of 90th issue (KZK1KY010901, MKM012_0090; KZT100, 02.07.08 - 02.07.09, actual/ actual).was held in KASE's trade system. Bonds` price was the subject of the trade. Initially, bonds with total face value of KZT5,000.0 m. were planned to borrow. 6 primary dealers participated in the trades, having submitted 13 limited bids. Total volume of active bids (volume of demand) made KZT14,273.0 m.(310.5% from suggested volume of bonds). The yield varied from 7.10 % APR to 19.00 % APR, making in average weighted expression 9.30 % APR. By results of trade, the issuer made cut off price at 93.4228% (7.47 % APR) rate and satisfied bids on sum KZT6,241.6 m., (what made 133.6% from planned volume of bonds). Statistical indicators of GS secondary market in July 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 - 41.5% (82.8%) of the market ------------------------------------------------------------------------------ less 8 4.00 4.00 4.00 4.00 (3.50) 2,999.0 2 8 - 14 4.00 6.00 4.00 5.19 (5.74) 880.5 6 15 - 28 5.76 5.76 5.76 5.76 (5.75) 695.5 3 64 - 91 6.15 6.15 6.15 6.15 (6.50) 1,971.1 2 182 - 364 7.30 7.30 7.30 7.30 (7.42) 294.4 1 ----------- ------ ------ ----- -------------- ---------------- -------- Total 6840.4(19571.2) 14(22) ----------- ------ ------ ----- -------------- ---------------- -------- Coupon GS (KZT): MEOKAM, MEUJKAM, MUIKAM - 58.5% (17.2%) of the market ------------------------------------------------------------------------------ less than 730 7.15 9.58 7.50 8.27 (8.25) 2,040.0 14 731 - 1095 8.40 9.55 8.40 8.96 (8.20) 185.3 3 1096 - 1460 8.53 8.53 8.53 8.53 ( -) 136.5 2 1461 - 1825 18.15 19.93 18.15 19.01 ( -) 115.5 2 1826 - 2190 8.00 9.30 8.20 8.94 (19.37) 752.6 4 More than 2191 5.70 20.96 18.29 17.89 (19.16) 6,408.5 33 ------------------- ------ ----- -------------- ---------------- -------- Total 9638.5(4051.6) 58(44) ------------------- ------ ----- -------------- ---------------- -------- GRANDTOTAL 16478.9(23622.8) 72(66) ------------------------------------------------------------------------------ The stake of exchange's turnover in total volume of purchase and sale deals of Kazakhstan GS secondary market in July made 71.3% (in June - 86.6 %).r [2008-08-08]