September GS primary market in Kazakhstan
04.10.00 00:00
/IRBIS, Oct 04, 00/ - IRBIS financial markets information agency has
completed analysis of Kazakhstan GS primary market for September 2000.
The data assessment indicated that Ministry of Finance (MOF) managed to
advance in prolongation of domestic debt terms. This success is
fundamental for MOF and is a propagation of August developments
consisting of MEOKAM floatation of three years to maturity. Two and three
year bonds took 51.3% in the total volume of MOF borrowings in September.
Yields for three-year MEOKAM decreased for the month from 18.00 to
17.50% APR, two-year bond yields remained stable - 15.90%. For
MEKKAM-12 yields fell from 11.99 to 11.00%, MEKKAM-6 - from 10.99 to
8.51%, MEKKAM-3 - from 9.50 to 9.12%. As a result, the total share of mid-
term borrowings (two, three year maturity) increased in September to 49.1%
from 28.0% in August. As above-stated data showed this process was
accompanied by debt servicing cost decrease.
The particular attention should be paid to September introduction of MEIKAM
(18 month circulation term) indexed on devaluation. Despite limited demand
from participants on previous auctions for MEIKAM with 3,6,9 months
maturity, these securities displayed their attractiveness at repayment. The
increased demand on this kind of securities should be expected in future.
This is most important when rate of devaluation remains behind of inflation.
Another one particular tendency in September is the MOF performance with
negative balance of borrowings in conditions of exposure to debt terms
prolongation. By results of the month, this number equals to KZT-3,079.0
mln. It means that repayments exceeded the sum of issued debt. As a result,
the MOF debt issued in the form of GS decreased in September by
KZT2,990.4 mln at face value.
The performance of the National Bank on GS market (notes floatation) was
different from that of MOF. Significant problem of "excessive funds" resulting
in inflation forced the leading bank to be more active in regulating currency
circulation (in contrast to August situation). Substantial August purchases on
the forex market led to excess of money on banks accounts. These funds did
could not flow to the real sector. At the same time, MOF was not able to
seize money as it mostly worked with MEOKAM, which were in limited
demand among investors. The consequences shortly affected both inflation
and forex market as it indicated by first decade movements in September
(i.e. when dollar rapidly strengthened at KASE). Thus, volume of short-term
notes issue started gradually increase. In somewhat critical situation
developed on Sep 08, NBK was forced to issue notes-28 for the first time.
The measures brought effect at the second half of the month. Short-term
money quotations raised and demand on the US dollar started to fall. At the
same time, NBK temporary lost its ability to lower yields as it targeted on
sterilization. Yield for notes-56 were fixed at 7.70%, notes-63 - 7.85%, and
notes-70 - 7.81%, whereas the yield for notes-77 was lowered to 7.88% just
at the end of September (when market stabilized).
Thus, NBK was temporary forced to suspend its debt lowering policy. In
September, at attracted volume of KZT13,664.4 mln the issuer repaid only
KZT8,517.8 mln of notes. The month finished with positive balance of
KZT2,067.7 mln. The total short-term debt of NBK grew up by KZT5,340.2
mln. For MOF and NBK this number was equal to KZT2,349.9 mln.
Nevertheless, considering the limit of notes maturity, which is less than 77
days, temporal increase in capitalization of GS market in September should
not be taken as refusal from debt lowering policy.