Results of initial offering auction of first issue municipal bonds of Eastern-Kazakhstan region

/KASE, June 19, 01, official press-release of the Exchange/ - On June 19, 2001 the initial offering auction of the first issue of coupon bonds of local executive body of Eastern-Kazakhstan region (VKO) with 1,095 days (3 years) of circulation was held in the trade system of the Kazakhstan Stock Exchange (KASE). Announced floatation volume - KZT500m at face value. Only competitive bids were accepted at the auction. The bonds were offered by the issuer at face value. The trade was held over the fixed coupon rate, which is to be paid to bondholders semiannually. Following are the parameters of the issue and complete auction data. ------------------------------------------------------------------------------ Type of securities registered coupon bonds indexed to KZT/USD exchange rate NIN KZ7051806A46 Trade code of KASE VKU036.001 Face value, USD 100,00 Auction date June 19, 01 Settlement date (till 16:00 ALT) June 19, 01 Circulation starts on June 20, 01 Maturity (nominal / actual) June 18, 04 / June 18, 04 Circulation term 1,095 (3 years) Coupon type semiannual Dates of coupon payments (nominal / actual) 1 18.12.01 / 18.12.01 2 19.06.02 / 19.06.02 3 18.12.02 / 18.12.02 4 19.06.03 / 19.06.03 5 18.12.03 / 18.12.03 6 18.06.04 / 18.06.04 Announced issue volume, KZT 1,000,000,000.00 Offering volume at auction, KZT 500,000,000.00 Time basis for payments actual/365 Servicing exchange rate (KZT/USD) 146.45 --------------------------------------------- ------------------------------- Number of participants - KASE members 7 Volume of submitted bids, bonds 57,500 Volume of submitted bids, KZT 842,087,500.00 Minimum yield on demand, % APR 3.0000 Maximum yield on demand, % APR 11.0000 WA yield on demand, % APR 8.7445 --------------------------------------------- ------------------------------- Volume of satisfied bids, bonds 6,000 Volume of satisfied bids, USD 600,000.00 Volume of satisfied bids, KZT 87,870,000.00 Yield set by issuer, % APR 6.3000 ------------------------------------------------------------------------------ Total of 15 bids from 8 investors have been made at the auction. Demand exceeded the supply 1.68 times at the auction. The banks expressed the most interest in buying the bonds, who accounted for 53.9% of the demand. The proportion of bids submitted by using the pension assets equaled 40.9%. Brokerage-dealing companies accounted for 5.2%. After the cut-off procedure and setting the coupon rate at 6.3% APR only 2 bids have been satisfied (from two investors). By the results of the auction, 50% of the floatation volume was purchased by accumulative pension funds, and another 50% - brokerage-dealing companies. Actual floatation volume was KZT412.1m, or 5.7 times less than planned volume. The coupon rate that has settled at the auction corresponds to 6.30% APR YTM on semiannual basis or 6.40% APR on an annual basis (effective yield in the National Bank's terminology). The issuer plans to conduct additional offering at a certain rate (6.3% APR) in near future. The terms of the additional floatation are to be coordinated with the Ministry of Finance. The date and the method of the auction will be announced additionally. The issuer is local executive body of Eastern-Kazakhstan region (akimat). Financial consultants of the issuer are DB SECURITIES (KAZAKHSTAN) OJSC and TuranAlem Securities LLP. The legal consultant of emission and the issuer is White & Case LLP (Almaty). Financial agent - Kazakhstan Stock Exchange CJSC (Almaty). The register is maintained by Central Depository of Securities CJSC (Almaty). The market maker of bonds is TuranAlem Securities LLP. Issue, circulation and redemption procedures of the bonds are regulated by the "Issuing, floatation, circulation, repayment and servicing rules for bonds of the local executive body of Eastern-Kazakhstan region", which was approved by the resolution of the Government of Kazakhstan #685 dated May 22, 2001. The bonds were admitted to trades on June 12, 2001 by the decision of the Board of KASE and resolution of the Exchange Council dated June 11, 2001. The purchasing of the bonds by Pension Assets Management Companies and State Accumulative Pension Fund CJSC (SAPF) using the pension assets is permitted by the resolution #846 of the National Securities Commission of Kazakhstan Directorate, dated June 18, 2001 "On investing the pension assets into the bonds of local executive body of East- Kazakhstan region". The bonds were issued with the object of implementing Regional Investment Program (RIP) that includes three projects: - Construction and launching of a beer plant (Vostok-pivo LLP, Semipalatinsk) - production and processing of gold ore from the Bolshevik deposit. The project is operated by mining metallurgy company (MMC) "Altyn-Aimak" (Ust-Kamenogorsk, created in 1999 by merger of Irtish Zoloto CJSC and Artel Trud CJSC. Final product is commodity gold. - small and medium business assistance, assistance to agricultural producers. All payments on the bonds are made in tenge at official rate of KZT/USD set by the National Bank of Kazakhstan on the day preceding the payment date. Based on the rules, the issuer can call back the bonds by paying the coupon for their actual circulation term during corresponding period.