Kazakhstan - A rare success from the CIS

It may have more illustrious neighbours, but giant, oil-rich Kazakhstan is largely self-sufficient in food, has a functioning domestic capital market and modern pension system and is run on democratic lines. It also has access to the international capital markets and has just repaid a maturing Eurobond. Ted Kim reports

Nursultan Nazarbayev Despite the continuing struggle over Russian debt negotiations and the flood of litigation about to hit the New York courts following Ecuador's Brady bond default, in September last year Kazakhstan managed to become the first CIS issuer and one of relatively few emerging market sovereigns to tap the international debt markets since the August 1998 crisis. The $200 million dollar-denominated sovereign Eurobond was received - so well that it was later increased. "All the bankers I spoke to, both here and abroad, feel that the success of this issue was important for everyone involved in emerging markets," says Madina Dushimova, director of international sales at Kazkommerts Securities in Almaty. "It has indicated resumed investor interest in Kazakhstan and has opened the door for other Kazakh issues." The $200 million five-year issue carried a steep 13.625% coupon and, at offer, was initially priced at a spread to US treasuries of 825 basis points. The was at the higher end of previous market estimates of 775bp to 825bp, but such a price was necessary to attract investors still wary about the region.