Complete results of MEKAVM-12 #5/12B offering

/IRBIS, Feb.15, 00/ - On February 15 the Ministry of finance of Kazakhstan with the National Bank held the 4th auction for offering MEKAVM-12 (364 days). Announced volume of the issue is determined by the emitter at $4 mln. Size of satisfaction of noncompetitive bids is 50% of specified amount. Following is the complete offering data and comparison with previous similar tranche: Type of the securities МЕКАVМ-12 МЕКАVМ-12 NSIN KZ4CL1502A18 KZ4CL0902A16 KASE trade code МВМ012.005 МВМ012.004 IRBIS registration number 05/12B 04/12B Par value, tenge 100.00 100.00 Issuance date Feb.15, 2000 Feb.10, 2000 Circulation start date Feb.17, 2000 Feb.11, 2000 Maturity date Feb.15, 2001 Feb.02, 2001 Days in circulation 364 364 Number of Primary dealers 12 (+ 3) Demand, mln USD 12.8 (- 0.6) Weighted average yield on demand, % APR 10.50 (+ 0.42) Planned volume, mln USD 4.0 ( 0) Actual volume, mln USD 7.9 (- 2.1) Cut-off price, USD 90.85 ( 0) Weighted average price, USD 90.85 ( 0) Maximum yield, % APR 10.07 ( 0) Weighted average yield, % APR 10.07 ( 0) Effective weighted average yield, % APR 10.07 ( 0) The yield is given in currency terms. The Ministry of finance says no applications were submitted by non- residents. Popularity of currency one year papers of the Ministry of finance is growing. In IRBIS specialists' opinion, publication of the monetary-credit policy of the National Bank for this year had an impact on the investors. Its intentions to "tie" the devaluation to the inflation, announcement of planned growth rate of consumer prices and reduction of forecasted yearly average exchange rate of the dollar made long papers indexed by devaluation quite attractive instrument. "Huge mass of tenge on the market" (as one dealer said) requires investment objects, and the choice of financial instruments is still poor in Kazakhstan. Hence, high demand for one year MEKAVM that allow to hedge against devaluation risks. More short tenge papers are needed now. And the Ministry of finance takes it into account by planning to offer MEKKAM-3 during the week. Sharply grown return in submitted bids draws the attention in offering parameters. Some investors try to exert a pressure on the emitter. However, these attempts did not succeed yet. Judged by current situation it can be assumed that the Ministry of Finance will hardly go for an increase in the returns of MEKAVM. Even keeping them on attained levels surprises somewhat, considering the last statements of the government about the absence of budget deficit financing. It is likely that large volume of net- borrowing is required for the Ministry of finance today to restructure its debt through calling back SS that were intensively issued in November and December of 1999. When restructuring of the debt will be finished and its servicing will be distributed more or less evenly, the Ministry of finance will use the great demand to lower the yields, and the volumes of raised money will go down.