Kazakhstan: Sovereign sells first Eurobond for 14 years
Investor demand tops $11 billion; Oil price, rouble falls raise devaluation fears.
Falling oil prices and fears of an imminent currency devaluation failed to dampen demand for Kazakhstan’s first international sovereign bond for more than 14 years in October.
The $2.5 billion dual-tranche bond attracted more than $11 billion of orders and priced at the lowest levels ever achieved by a CIS sovereign, with 10-year and 30-year yields set at 4.07% and 5.12% respectively.
Analysts say the deal’s success is partly due to Kazakhstan’s strong economic fundamentals – GDP grew at 6% last year and is forecast to expand by a further 4% this year, while public sector debt amounts to barely 12% of GDP – and partly to the lack of activity elsewhere in the region.
“The sovereign bond was very well timed,” says Dmitri Fedotkin, CIS economist at VTB Capital. “The traditionally strong supply from Russia and Ukraine has been put on hold, and for investors looking for diversification the availability of regional options is somewhat limited.”
Eurobond issuance volumes for the CIS region in the nine months to the end of September totalled just $13.1 billion, less than a quarter of the $57.7 billion sold in the same period last year, according to Dealogic.