Results of initial offering of Astana second issue municipal bonds

/KASE, Sept 20, 01, official press-release of the Exchange/ - On September 20, 2001 an initial offering auction was held in the trade system of the Kazakhstan Stock Exchange (KASE) for floatation of the second issue inscribed coupon bonds of local executive body of Astana. Only competitive bids were accepted at the auction. The bonds were offered by the issuer at face value. The trades were held over a fixed coupon rate, which will be paid to the bondholders semiannually. Following are the issue parameters and complete results of the auction. ----------------------------------------------------------------------------- Type of the securities inscribed coupon bond indexed towards KZT/USD rate fluctuation NIN KZZ2KY010026 KASE trade code ASU012.002 Face value, USD 100.00 Auction date Sept 20.01 Payment date (till 4:00PM ALT) Sept 21.01 Circulation begins on (first day of coupon accrual) Sept 22.01 Maturity date (planned / actual) Sept 20.02 / Sept 20.02 Circulation term 364 days (1 year) Coupon semiannual Coupon payment dates (planned / actual) 1 March 22.02 / March 22.02 2 Sept 20.02 / Sept 20.02 Announced issue volume, KZT 916,200,000.00 Floatation at the auction, KZT 916,200,000.00 Calculation basis actual/364 Servicing rate on payment date (KZT/USD) 147.70 --------------------------------------------------- ------------------------- Number of participants - members of KASE 6 Volume of submitted bids, number of bonds 440,465 Volume of submitted bids, KZT 6,505,668,050.00 Minimum yield on demand, % APR 8.0000 Maximum yield on demand, % APR 9.8000 WA yield on demand, % APR 8.8787 --------------------------------------------------- ------------------------- Volume of satisfied bids, number of bonds 62,031 Volume of satisfied bids, USD 6,203,100 Volume of satisfied bids, KZT 916,197,870 Specified yield, % APR 8.5000 ----------------------------------------------------------------------------- A total of 28 bids were made at the auction, of this number 25 bids remained active at the closing of the auction. Demand exceeded the supply 7.10 times at the auction. The clients of the banks, members of the Exchange (including different investors such as other banks) expressed the greatest in buying the bonds, who accounted for 75.3% of the demand. The proportion of bids submitted by the banks themselves reached 21.2%. The Pension Assets Management Companies accounted for 3.5%. It should be noted that no notification was received from the Stock Market Regulatory Department of the National Bank of Kazakhstan regarding the permission to buy the bonds using the pension assets. However, PAMC can buy the bonds using their own funds. No bids have been made by brokerage-dealing companies. After the issuer has conducted a cut-off procedure and thus, set the coupon rate at 8.50% APR, 6 bids have been satisfied, which have been submitted by 3 members of the Exchange. By the results of the auction, 71.7% of the bonds was purchased by the clients of the banks. The banks bought 28.3%. And the issuer placed all planned issue volume. The issuer of the securities is a local executive body (akimat) of Astana. Financial consultant of the issuer: Fondovyi servis CJSC (Almaty). Legal advisor of the issue and the issuer is KAZAKHSTAN LEGAL GROUP LLP (Almaty). Financial agent of the issuer - Kazakhstan Stock Exchange CJSC (Almaty). The market-maker status of the bonds at the KASE is given to Fondovyi servis CJSC. The bonds have been admitted to the Exchange by the decision of the Board of the KASE on September 11, 2001 on the basis of the decision of the Exchange council of the same date. Issue, circulation and maturity order of the bonds are regulated by the document "Temporary rules for the issue, circulation and maturity of the bonds of local executive body of Astana", which was approved by the resolution of the Government of Kazakhstan, dated December 20, 1999, $1950. Among the documents regulating this borrowing are also following documents (they are at the KASE can be provided for the familiarization): - resolution of the Government of Kazakhstan "On regional investment program and borrowing of local executive body of Astana" of June 8, 2001, #780; - decision of the Maslikhat of Astana "On borrowing the funds to finance regional investment project", dated April 5, 2001, #84/17-II. The bonds are government securities issued by the issuer in non- documentary form to implement the project "Construction of the third branch of the waterway from Vyacheslav water reservoir to Astana". The project is being implemented based on the resolution of the Government of Kazakhstan, dated August 31, 2000, #1324. The goal of the project is to improve the centralized water supply of Astana related to the construction of the third branch and divesting the first branch of Vyacheslav reservoir waterway, expansion of the first level pumping station, increase in water supply by taking into account the consumption growth perspectives. The cost of the project based on its business plan and construction contract is $36m. Term of the project is 14 months, financing started in the 4th quarter of 2000 and should end in the 4th quarter of 2001. The project is financed through 3 sources: national budget, budget of Astana, borrowed funds of local executive body of Astana. All settlements regarding the bond issue servicing are made in Kazakhstani tenge at KZT/USD rate of the National Bank of Kazakhstan set on the date preceding the settlement date.