National Bank notes-63 of #441 issue - floatation results

/IRBIS, Oct 04, 00/ - On October 04 the National Bank of Kazakhstan (NBK) held the 441st auction for floatation of notes with KZT100 par value and 63 day circulation term. Announced volume of the issue is set by the issuer at KZT700 mln. Size of satisfaction of non-competitive applications is 60% of specified amount. Auction was held with additional offering conducted during the day. Below is results of the floatation and its comparison with previous issue. Type of the securities Notes-63 Notes-63 NSIN KZ99K0712A00 KZ99K3011A02 KASE trade code NTK441.063 NTK438.063 IRBIS registration number 441/N 438/N Par value, KZT 100.00 100.00 Issuance date Oct 04, 00 Sep 27, 00 Circulation start date Oct 05, 00 Sep 28, 00 Maturity date Dec 07, 00 Nov 30, 00 Days in circulation 63 63 Number of Primary agents 11 (+ 3) Demand, mln KZT 3,676.3 (+ 2,531.0) WA yield on demand, % APR 7.79 (- 0.41) Planned volume, mln KZT 700.0 (+ 200.0) Actual volume, mln KZT 3,506.7 (+ 2,614.3) Cut-off price, % of par value 98.66 ( 0) WA price, % of par value 98.68 (+ 0.02) Maximum yield, % APR 7.85 ( 0) Weighted average yield, % APR 7.73 (- 0.12) Effective WA yield, % APR 7.97 (- 0.13) This floatation is record breaking in several senses. The single auction demand has never been so high in the current year, whereas the same level of actual volume of satisfied bids has a two-year history. Demand parameters are also impressive if consider three emissions of MOF and NBK on the current week for a total of KZT2.8 bln. One notable fact is that that bids yields were lower than actual rate on the previous auction for notes-63. The reason for such interest is excessive liquidity of banks due to substantial repayments of GS on the last week, systemic NBK dollar purchases, and steady, planned decrease in borrowing volumes of MOF. The MOF's shift from MEKKAM-6, 12 to two, three year MEOKAM in the framework of debt restructuring policy, contributes to these liquidity problems as the latter are in moderate demand. At the same time, management staff of banks remark problems with real sector crediting. There are too high credit risks among projects. Considering all of above mentioned and September results one could conclude that "excessive money" problem sharpens. Today, short-term money quotations (interbank "overnight" tenge deposits) were at 0.1/3.1% APR at morning and grew up 3.0% by the evening. This led to rapid fall in demand for the money. For Kazakhstan market these quotations are record low. Activity of traders in KASE repo-sector did sharply slide down. Today, moneys were attracted at 6.50% for a week term. Thus, it is clear why NBK planned new notes floatation with 42 days to maturity on Thursday. The market should be promptly sterilized to avoid difficulties with liquidity and its impact on inflation and forex market. This also clears the NBK tactics: maximal borrowing volume at guided yield dynamics. Nevertheless, these two tasks would be difficult to realize in terms of existing demand parameters.