Kazakhstan bonds grow due to pension funds' demand of

/Almaty bureau REUTERS, Olzhas Auezov, September 13, 02/ - Prices of the most liquid Kazakhstan government and corporate bonds increased within the current week due to high level of demand from pension funds and other investors, traders say. "Investors purchase absolutely everything, - said an analyst of western investment company. - Pension assets grow very quickly". "Yield of ten-year securities of the Ministry of finance, till redemption of which 5 years are remaining, decreased from 8.65% to 8.35% - this is the yield of two- year and three-year securities, - he added. - Their yield, as we expect, will decrease even lower". This week the Ministry of finance offered three-year securities for the amount of KZT900m, for the first time for many years having decreased yield to 8.25 APR from 8.30 APR. Industrial East-Kazakhstan oblast made on this week additional floatation of three-year bonds for KZT310m with the yield to maturity on the level of 8.04653% APR having coupon rate of 8.50% APR. In the sector of corporate bonds there is also growth of prices. Eurobonds of the state oil-transport company KazTransOil CJSC with coupon rate of 8.50% APR increased during this week by 3%, having reached almost the level of its face value. On August 22 rating agency Fitch announced about increasing of the senior unsecured rating of KazTransOil CJSC to "ВВ" from "ВВ-". Traders mark popularity of these securities at international markets. "(Eurobonds of) KazTransOil - the most liquid Kazkahstan eurobonds, even now, when redemption of Russian securities are being redeemed, many (international) investors want to purchase precisely these instruments", - said Erke Nurkenov, trader of pension assets management company (PAMC) Zhetysu. Domestic investors, the largest of which are pension funds, getting ready to the forthcoming (on October 2) redemption of eurobonds of Kazakhstan in the amount of $350m, out of which, by the National Bank's evaluation, about $210m will come to Kazakhstan market. The National Bank and the Ministry of finance several times informed about the fact that the issue will not be refinanced. Head of the National Bank Grigory Marchenko said this week that internal securitie of the Ministry of finance with different maturity terms eurobonds of the state Development Bank of Kazakhstan are meant to substitute sovereign eurobonds, and in accordance with this reexamination of limits of pension assets investing towards increasing of the share of corporate bonds is expected. Besides, a small volume, according to Marchenko's words, will be placed in the bonds of Kazakhstan mortgage company, and the National Bank is ready to increase volume of notes in circulation for regulation of residual liquidity. Banks and funds hope to have opportunity to invest as little means into securities of the Ministry of finance, which are of low profitability and long. "I think it would be more correct if the most part (means released from redemption of euroborrowing) is directed to the bonds of Development Bank", - he said on Wednesday. Market's participants expect increase of initially announced volume $100m of the state bank's notes issue. "We believe that Development Bank will issue five-year eurobonds for $100- 150m ", - said an analyst of a western mortgage company. "Sure, about 50% of these securities will come to us (pension funds)", - Nurkenov from PAMC Zhetysu believes. Taking into account the existing surplus of money and their new inflow from redemption of sovereign eurobnods, investors do not expect high yield of eurobonds of Development bank. "The bank bringing out securities with low yield, - assures the analyst. - They play on redemption (of eurobonds of Kazakhstan)". "The expected yield, which they want to see - from 7.0 to 7.5% APR ", - he added. The bank still keeps off from any comments concerning parameters of the expected issue. As regards the Ministry of finance, market' participants expect from it securities with the term of from 5 to 10 years with yield of about 9.0% APR in tenge. Traders, being sure that sooner or later they will have to purchase these securities, hope they will be indexed to inflation rates. "It will be good if they are indexed, if not - плохbad", - said Nurkenov from PAMC Zhetysu. Lately the Ministry of finance did not issue indexed securities. [2002-09-13]