MEOKAM-36 of the Ministry of Finance of Kazakhstan issue #33 - complete offering results

/IRBIS, March 26, 01/ - Today the Ministry of Finance and the National Bank of Kazakhstan held the 33rd auction for MEOKAM-36 floatation (1,092 days). Announced volume of the issue is determined by the issuer at KZT400 mln. Size of satisfaction of noncompetitive applications is 50% of specified amount. Following are complete offering results and the comparison with previous similar tranche. Type of the securities MEOKAM-36 MEOKAM-36 NSIN KZ53L2503A44 KZ53L1703A44 KASE trade code MOM036.033 MOM036.032 IRBIS registration number 33/36 32/36 Par value, KZT 1,000.00 1,000.00 Issuance date March 26, 01 March 20, 01 Payment day (till 11:00AM Almaty time) March 29, 01 March 21, 01 Circulation start date March 29, 01 March 21, 01 Maturity date March 25, 04 March 17, 04 Days in circulation 1,092 1,092 Coupon payments dates Sept.27, 01 Sept.19, 01 March 28, 02 March 20, 02 Sept.26, 02 Sept.18, 02 March 27, 03 March 19, 03 Sept.25, 03 Sept.17, 03 March 25, 04 March 17, 04 Planned volume, mln KZT 400.0 ( 0) Number of primary dealers 13 (+ 3) Demand, mln KZT 1,387.0 (+ 292.7) Max. fixed yield on demand, % APR 20.00 (- 5.00) Actual volume, mln KZT 955.0 (+ 619.7) Set up fixed yield, % APR 10.50 (- 1.20) The Ministry of Finance informs that non-residents did not submit any bids at the auction. This auction has two interesting parameters: very soft in terms of price demand and changes in the issuer's tactics. The first, soft demand, was due to a very high liquidity of the market in tenge and impossibility of buying dollars by the second tier banks. The second is a big borrowing volume, which exceeded announced issue volume more than two times. Lately, such behavior is not typical to the Ministry of Finance, who usually adheres to planned figures of the debt restructuring. In the opinions of IRBIS analysts, the reason if the payment of a coupon on sovereign euronotes of Kazakhstan on April 2 (XS0080679961, Oct 2, 97 - Oct 2, 02, $350 mln, semiannual coupon at 8.375% APR, current return on domestic market is 6.40% APR, ISMA - 6.574% APR). At current rate of KZT/USD the payment amount is KZT2,131.6 mln. As the experience of servicing previous sovereign debt shows, the Ministry of Finance usually increases borrowing on domestic market before the coupon payments on euronotes. Meanwhile, investors are far from using this factor to exert a pressure on the issuer by raising the rates in their bids. There is too much free money on the market, and the auction factor, when everybody tries to get below the cut-off level, provides the issuer with soft demand and opportunity to reduce the domestic debt servicing cost.