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Kazakhstan: Foreign debt weighs on Kazakhs

At least two of Kazakhstan’s leading banks are likely to seek a restructuring of their foreign debts in the near future. President Nursultan Nazarbayev has requested that the Kazakh government come up with a plan to help banks resolve their debt repayment problems by the middle of May.

Already Alliance Bank, the country’s fourth-biggest lender, has requested a three-month moratorium on debt repayments after it was forced to write down $1.1 billion of assets linked to guarantees backed by US treasuries. These were issued between 2005 and 2008 but have not been properly reflected in the bank’s balance sheet. In 2009, Alliance has to repay about $570 million and the bank has already admitted to missing a loan repayment in March. Milena Ivanova-Venturini, banking analyst at Renaissance Capital in Almaty, says the fact that the government has yet to proceed with plans to take a majority stake in Alliance gives it more leverage with investors to restructure the bank’s $4 billion of foreign debt, as it could still choose to let the bank go to the wall if investors demanded early debt repayment under change-of-control clauses on its borrowings.

"We hope we will come to a win-win situation with investors. We’ve met all our repayments so far"

Anvar Saidenov, BTA

Anvar Saidenov, BTA

BTA, the Central Asian republic’s biggest bank, is also widely expected to reveal plans for a debt restructuring soon. Anvar Saidenov, recently appointed chairman of the management board of BTA, tells Euromoney: "We hope we will come to a win-win situation with investors on the debt issue," adding: "We’ve met all our repayments so far."