Head of KASE doesn't forecast a rapid growth of corporate bonds

/INTERFAX, Almaty, May 19, 05/ - Azamat Joldasbekov President of Kazakhstan stock exchange (KASE) does not expect a rapid growth of corporate bond market in the future. "We (KASE. - "IF-K) do not expect a rapid and sudden growth of corporate bond market. It will be an evolutional quantitative growth of the market bounded with change of Kazakhstan GDP and growth of accumulative pension assets volume", - KASE's head said at the bond congress of CIS countries on Thursday in Almaty. He says stock market's participants expect that foreign bonds "will appear anyway" in Kazakhstan, because, according to his words, there is necessary infrastructure and normative base for them that lets float bonds issued abroad and letting non-residents float bonds. Joldasbekov says new types of corporate bonds - infrastructure and project ones are expected in this year already due to support of the state. Characterizing Kazakhstan stock market KASE's head said by the beginning of 2005 total capitalization of the organized market had equaled to $5.3 bn., or 12.8% to GDP. Joldasbekov called corporate bond market "most developed and effective", it's peculiarity, as he said, was presence of domestic as well as international bonds of Kazakhstan issuers. According to his data, at the beginning of the year stake of international bonds of republic's residents in total capitalization of exchange's corporate bond market was 62%. KASE's head says "the very big volume" - 90.1% - from the whole corporate bond market falls to the stake of the financial sector, in particular, issues of banks as well as Kazakhstan mortgage company, BTA Ipoteka and Astana- finance. According to Joldasbekov's words, one more peculiarity of republic's corporate bond market is its "main bias" on primary floatation. "Our investors prefer to buy securities and keep until maturity. So the stake of the secondary market is small: as for the primary market by the end of 2004 it was 13.7%", - he said. Regarding corporate bonds' yields, Joldasbekov has said at present the spread between yield of "qualitative" corporate bonds of "A" listing and inflation is 2 percentage points. He called the present yield on corporate bonds as "understated" in comparison with countries, which have sovereign ratings similar with Kazakhstan's ratings. "Bonds have understated yields that, on one hand, is profitable for Kazakhstan issuers, on the other hand - not profitable for investors", - he said. KASE's head has said during the latest years there is "complication of methods" of determining coupons and yield on corporate bonds. "First bonds were nominated in US dollars, the second one provided transmittance to tenge bonds that was connected with strengthening of tenge, but recently there appeared bonds indexed to inflation rate, or to revaluation and devaluation of US dollar with protection in this or that direction", - Joldasbekov said. Besides, Joldasbekov says, lately Kazakhstan corporate bond market "illustrates a rather rapid prolonging of circulation terms of issues". Thus, as he says, on the first stage bonds were issued with 1-2 year circulation term, and "now bonds with 7-year term do not surprise anyone". As the result medium circulation term of corporate bonds last year reached four years and a half, he noted. As the whole, he says, Kazakhstan corporate bond market was formed under the influence of two factors: objective - due to presence of institutional investors, in particular, accumulative pension funds, and special one - by means of stimulating development of the market by the state. [2005-05-23]