Offering of Kazakhoil bonds - the first case of big investments into real sector of the Kazakhstani economy through the stock market

26.06.00 00:00
/IRBIS, June 26, 00, official press-release for mass media/ - On June 23, 2000 the auction for initial additional offering of CJSC "NOC "KAZAKHOIL" coupon bonds (KZ72LAG56A20, official list of the KASE securities, category "A", trade code KZOLb) was held in the trade system of Kazakhstan stock exchange (KASE). Today the issue of these bonds is the biggest issue of corporate debt of the company which works in real sector of the Kazakhstani economy. Until now, only the banks were using such big loans on domestic market. Initially, the issue of NOC "KAZAKHOIL" bonds was registered for an amount of 16 mln U.S. dollars. Along with the registration of the issue, the issuer provided with necessary documents to undergo the listing at the KASE and received a positive comments from Listing commission. As a result, by the decision of the Board of the KASE, on May 25, 2000 coupon bonds of closed joint stock company "National oil and gas company "KAZAKHOIL" (Astana) were entered into the Exchange's official list of the securities under the category "A". Thanks to it the issuer found an opportunity to attract the money of a big institutional investor of Kazakhstan - private accumulative pension funds - by offering bonds. The lead manager and financial consultant of NOC "KAZAKHOIL" bond issue on domestic market was a Consortium of OJSC "Kazkommerts Securities" (Almaty), OJSC "Halyk Bank of Kazakhstan" (Almaty), CJSC "SJSB ABN AMRO Bank Kazakhstan" (Almaty). When the book of bids was being created among domestic investors it was revealed that demand for the bonds has noticeably exceeded the issue amount. It became a reason for the re-registration of the issue, and the amount was increased to 25 mln U.S. dollars, or 250 th. bonds. The bonds are denominated in U.S. dollars. Face value - $100.00. Issue date - June 5, 2000. Circulation term - 2 years. The payments for the bonds are made in tenges at weighted average rate of the KASE, effective on the payment date. Coupon is semiannual at 9% APR in terms of U.S. dollars. Payment dates are December 5, 2000, June 5, 2001, December 5, 2001 and June 5, 2002. Coupons are paid in the Kazakhstani tenges at weighted average rate of the KASE, effective on payment date by transferring the money to the accounts of the bond owners, who were registered 10 days prior to the maturity day. The funds, raised by the issue of the bonds, are to be used for general corporate goals of NOC "KAZAKHOIL" in accordance with the charter, and first of all, to finance the development of oil fields in Atyrau and Mangistau regions. Of all the issue, 240 th. bonds amounting to $24 mln are placed by NOC "KAZAKHOIL" by subscription through the lead manager. However, the issuer made a decision to place the bonds for the amount of 1 mln U.S. dollars at the auction held in the trade system of the KASE in order to support and for further development of the country's stock market. This additional placement was held at the KASE based on current regulations of the Exchange on following terms. The bids are made by the members of the Exchange in the trade system of the KASE from 11:30AM till 12:00PM Almaty time. The bids will be made at "clean" price in percents of the bond face value, excluding accumulated interest for the moment when the auction is held. Accumulated interest on the offering date is 0.45%. The securities purchased at the auction should be paid till 5:00PM Almaty time on June 23, 2000. Existing KASE members of category "P" (with the right to participate in the trades in private issue securities that were entered into official list of the Exchange) were allowed to take part in the auction. Complete list of the members with their contact information is kept up-to-date on the web site of the KASE (http://www.kase.kz/KASE/Members/). Other investors could make their bids through brokerage and dealing companies that are the members of the KASE. By the amount of the bids, at additional placement the demand exceeded the supply of the issuer 2.3 times in nominal terms. The proportion of the bids made by pension funds equaled 45.65%, that of the banks - 50.01%, from the clients of the brokers - 4.34%. After the cut-off NOC "KAZAKHOIL" chose the amount 850 th. U.S. dollars at the face value (8,500 bonds). Actual borrowing amount equaled $818,515.00 or KZT116,810,275.65. Weighted average clean (excluding accumulated interest) price for all satisfied bids has settled at 95.85% of the face value, with the cut-off price of 95.34%. Weighted average yield of the bonds equaled 11.76% APR at the offering, with the maximum of 12.08% APR, which corresponds to semiannual yield of 11.43% APR and 11.74% APR, respectively. Within actual volume of the issue the proportion of satisfied bids made by the pension assets management companies equaled 5.88% only, that of the banks - 82.36%, from the clients of the brokers - 11.76%. After the auction the bonds will circulate on the secondary market of the country freely, including at the KASE. At KASE the market-maker of CJSC NOC "KAZAKHOIL" bonds is OJSC "Kazkommerts Securities". From June 26 throughout the trades this company will constantly put out offer and bid quotations for at least 30 bonds (so called minimum volume of mandatory quotations), and maintain the minimum liquidity of the bonds at the Exchange. Thanks to such requirements, set to any market-maker of the securities at the KASE, the difference between the bid and offer price is strictly regulated. This protects potential investor from unjustified fluctuations of the bond quotations, and therefore, the market-maker acts as stabilizer of the market prices. As the director of the asset management department of NOC "KAZAKHOIL", Beimbet Shayakhmetov says, 45% of the issue, offered by the subscription, was purchased by commercial banks of Kazakhstan and 55% - by PAPF and pension asset management companies (PAMC). PAPF and PAMC were not able to invest into corporate bonds of big domestic companies that work in perspective sectors of real economy until now. For this reason only the offering is actually the first case of big investments made into industrial sector of Kazakhstan through the stock market. Presently, two other big national companies, that wish to get into domestic market with their bonds, are undergoing the listing procedure at the KASE - RGP "Kazakhstan temir joly" and KEGOC. Other organizations are also considering the possibility of raising the funds on domestic market by issuing bonds: the biggest Kazakhstani exporter NAC "Kazatomprom" and several leading Kazakhstani banks of the second tier. Today, it can be said for sure that gradually the management of the most progressive companies begins to realize the advantages of the stock market over the regular financing. Domestic institutional investor is capable of supporting this interest.