Kazakhstan bonds grow after redemption of eurobonds for $350m

/Almaty bureau REUTERS, Oljas Auezov, October 4, 02/ - Prices of more liquid Kazakhstan eurobonds went on growing after redemption on October 2 of sovereign eurobonds of Kazakhstan for the amount of $350m, and also due to positive outlooks on ratings of the biggest domestic banks, traders say. Kazakhstan investors, biggest of which are pension funds, by the National Bank's estimation, are to receive from redemption $210m, which need refinancing. "The first event (of the week) is, of course, redemption (of sovereign eurobonds)", - said an analyst of a western investment company. The Government and the National Bank planned that released investors' means will be directed to eurobonds of Development Bank of Kazakhstan and domestic securities of the Ministry of finance with circulation term, which is from two to six years. In the end of last week it became clear At the primary floatation Kazakhstan pension funds and banks purchased about 25% of $100-million issue of Development bank with the yield of 7.375% APR. However their share, in analysts' opinion, may increase due to transactions at the secondary market, where bond's price will be higher. Tenge indexed bonds, which were offered by the Ministry of finance as "gesture of free will" concerning investors - the country has no extreme need in borrowings for the budget has surplus - turned out to be less popular. Two auctions this week (on four- and six-year securities) were canceled because of absence of demand. "Why are they needed, long (domestic) securities now?", - ask rhetorical question a trader of a local pension assets management company (PAMC). According to his words, eurobonds of the largest Kazakhstan banks - Kazkommertsbank and Bank TuranAlem look more attractive. "Now everyone waits for upgrade concerning our banks", - said the trader. - "There is potential for the growth (of prices) ". On Monday international rating agency Moody's informed that after upgrading of Kazakhstan sovereign rating to investment level "Ваа3" from "Ва2" and "the ceiling" on deposits in foreign currency to "Ва1" from "Ва3", it can upgrade ratings of four Kazakhstan banks - Kazkommertsbank, Bank TuranAlem, Halyk bank and AMB. Besides, upgrading of ratings of eurobonds, which were issued by the first two banks is possible. "Announcement of Moody's functioned as trigger", - believes the analyst of a western investment company. "(Price of Kazkommertsbank's bond) grows very quickly like mad", - says him a trader of a domestic PAMC. According to their words, price of eurobonds of Bank TuranAlem also may sharply increase, if Kazakhstan pension funds receive access to them, what western investors can take advantage of. "Bonds of Bank TuranAlem are actively purchased by foreign investors", - said the analyst. - "About a week ago they were traded lower than at face value ($100), now their price reaches $101,75". "Sly foreigners will lay in a stock again (before the sharp increase of price)", - says him a local trader. Participants of the market believe that under the conditions of continued deficiency of qualitative instruments yield decrease may continue. "We'll see whether Kazakhstan will stand 7% (APR)", - said the trader of a domestic PAMC meaning the outlook of yield decrease on eurobonds of Development bank, which are key eurobonds for the market. Attempts of the Ministry of finance to solve problems of instruments deficiency due to sale at stock market of minoritary state blocks of shares of three monopolists non-ferrous metallurgy - companies Aluminium of Kazakhstan, Ust- Kamenogorsk titanioum-magnesium combine and copper corporation Kazakhmys - are estimated skeptically by investors. "The Ministry of finance wants to sell at high prices, and an existing shareholder will always pay more than a pension funds", - believes the trader of domestic PAMC. - "It is not interesting for us. Probably everything will be purchased (existing) shareholders, as usually". [2002-10-04]