QUESTIONING - Forecast of bonds' yield in Kazakhstan

/REUTERS, Almaty, Oljas Auezov, October 10, 03/ - Traders in Kazakhstan expect a short-term stabilization of government bonds' prices, but fear falling of prices of largest banks' eurobonds because of the prohibition for domestic pension funds to buy them. According to the data of traditional questioning of Reuters, which was made on Thursday and Friday, most questioned traders of largest banks believe that yield of government securities will be stable during the nearest month, but they keep from further forecasting. Yield of bonds of the Ministry of finance increased a bit in the end of September due to an insignificant increasing of the volume of borrowings, but traders are not sure that big issues will still be made during the long time. "There are no macroeconomic prerequisites for it, - said a trader of ABN AMRO Bank. - Probably, someone in the Ministry of finance just said more funds had to be borrowed". Ministry of finance of Kazakhstan, as a rule, made just small borrowings and within two years was stably decreasing its securities' yield under conditions of actual surplus of the budget. Ministry of finance does not comment on its actions at the debt market. Yield of the National Bank's notes, in traders' opinion, will also become stable in the nearest future because of more profitable offers of the Ministry of finance. At the same time, prices of eurobonds of the largest Kazakhstan banks - Kazkommertsbank and TuranAlem - may decrease because of liquidity reduction. In the end of September National Bank of Kazakhstan prohibited pension funds to buy bonds, which had been issued through SPV (special purpose vehicle), to which bank eurobonds concern, and obliged them to sell such the securities, which had been bought already. According to traders; words, although active sales of bank eurobonds have not started yet, compression of the market has already impacted their prices, and they may fall some more. "Western traders are actively searching for purchasers of eurobonds (of Kazkommertsbank and TuranAlem)", - said a trader of ATFBank. "Their prices have grown due to increasing of Russia's rating, but they may fall down is pension funds start merging them", - a trader of Kazkommertsbank agreed with him. And sovereign eurobonds, according to the words of market's participants, on the contrary, may grow in price after pension funds replace the sold bonds of banks by them. "Sovereign eurobonds may grow (in price) to (level of yield) 3.0% even after one deal", - the trader of ATFBank thinks. Below are forecasts of yield on various instruments (for National Bank's notes and bonds of the Ministry of finance - weighted average yield at forthcoming auctions, for corporate securities - average index between demand and offer, as percentage per annum, by the end of the period - month, three months and half-year): ---------------------------------------------------- in 1 month 3 months 6 months ------------------ ---------- --------- --------- Semiannual (182/189 days) NBK's notes (yield at the last auction on September 24 - 4.95% APR) ABN AMRO Bank 5.25 - - ATFBank 4.90-5.00 - - Kazkommertsbank 4.90-5.00 5.00-5.20 5.00-5.20 Bank TuranAlem 5.00 5.00 5.00 Bank CenterCredit 4.75-5.00 - - ------------------ ---------- --------- --------- Two-year MEOKAM (GTB) (yield at the last auction on August 11 - 5.80% APR) (yield at the last auction on August 11 - 5.80% APR) ABN AMRO Bank 5.90-6.00 - - ATFBank 5.90 - - Kazkommertsbank 6.00 6.00 6.00 Bank TuranAlem 6.10 6.20 6.20 Bank CenterCredit 6.30-6.50 - - ------------------ ---------- --------- --------- Three-year MEOKAM (GTB) (yield at the last auction on October 2 - 6.10% APR) (yield at the last auction on October 2 - 6.10% APR) ABN AMRO Bank 6.10 - - ATFBank 6.00 - - Kazkommertsbank 6.20-6.30 6.20-6.30 6.20-6.30 Bank TuranAlem 6.10 6.20 6.20 Bank CenterCredit 6.30-6.50 - - ------------------ ---------- --------- --------- Eurobonds of Kazakhstan with maturity in 2007 ATFBank 3.00 3.00 3.00 Kazkommertsbank 3.80 3.80 3.80 Bank TuranAlem 3.80 3.80 3.80 Bank CenterCredit 3.00-4.00 3.00-4.00 3.00-4.00 ------------------ ---------- --------- --------- Eurobonds of Kazkommerts International B.V. - 2007 ATFBank 7.30-7.50 7.30-7.50 7.30-7.50 Kazkommertsbank 7.00 7.00 7.00 Bank TuranAlem 7.20 7.20 7.20 Bank CenterCredit 7.00 - - ------------------ ---------- --------- --------- Eurobonds of TuranAlem Finance B.V. - 2007. ATFBank 7.70-7.90 7.70-7.90 7.70-7.90 Kazkommertsbank 7.40 7.40 7.40 Bank TuranAlem 7.40 7.40 7.40 Bank CenterCredit 7.40 - - ---------------------------------------------------- [2003-10-10]