Toughening of the rules complicated issue of eurobonds for Kazakhstan banks

29.09.03 00:00
/REUTERS, Almaty, Oljas Auezov, September 29, 03/ - Prohibition for purchasing eurobonds issued through SPV (special purpose vehicle) by Kazakhstan pension funds, which took effect last week, makes it difficult for Kazakhstan banks to issue eurobonds, bankers' say. The rules order pension funds to sell the securities, to which, in particular, eurobonds of the country's largest banks - Kazkommertsbank and TuranAlem concern. Toughening of the regulation has already caused displeasure of pension funds, which call banks' euronotes as the most liquid instruments at the narrow market. National Bank of Kazakhstan, in its turn, considers such securities as more risky because they have been issued in compliance with another country's legislation. Eurobonds issue through the founded in Netherlands daughter companies lets Kazakhstan issuers decrease the size of the paid taxes due to lower rates - 10% in comparison with 15% in Kazakhstan - and presence of agreement about avoiding double taxation. "Sure, National Bank has made it worse for issuers, - head of Kazkommerts Securities Eldar Abdrazakov thinks. - It increases cost of funding". According to his words, conditions become worse for both prosperous issuers and also for those, who have issued eurobonds already. New issuers, in order to get support of pension funds, will have to sacrifice with tax preferences, and the issued securities have lost a part of liquidity. "This is a dissatisfaction for investors - the fact itself is not pleasant, - said Abdrazakov. - Investors need liquidity". ATFBank, which after preliminary road-show in September postponed debut of eurobonds to the amount of up to $150 m. because of unprofitable proposals of investors, was preparing the issue directly, without using SPV, knowing about the forthcoming prohibition. "It (prohibition) makes money more expensive", - said deputy chairman of the bank's board Timur Isataev. Bank CenterCredit, which postponed issue of debut eurobonds to the amount of up to $125 m. because of similar reasons, has also decided to keep from using SPV, having taken into account the new rules. "I think, actually, it would be normal to issue bonds through SPV, because legislation of Holland has changed towards toughening, - said chief of loan capital markets department of bank CenterCredit Timur Ishmuratov. - I think it's not so risky, and the National Bank has made not really well-grounded decision ". "The point is not the fact that borrowing will be more expensive, but the fact that rules change,.. and it gives uncertainty. This uncertainty troubles more than other things ", - Abdrazakov from Kazkommerts Securities summarized. Now issued through SPV eurobonds of Kazkommertsbank with maturity in the years 2007 and 2013 in the total amount of $700 m. and securities of bank TuranAlem with maturity in the years 2004, 2007 and 2010 in the amount of $425 m., are traded at the international market. [2003-09-29]