Kazakhstan plans to issue Eurobonds worth $1BN
Kazakhstan, Astana, Jan. 29 / Trend, D. Mukhtarov /
The Kazakh government plans to issue Eurobonds worth 150 billion tenge ($ 994.4 million), Kazakh Finance Minister Bolat Zhamishev said at the government meeting today.
"The national budget deficit for 2013 has been fully approved at the amount of 785.2 billion tenge (150.76 tenge = $ 1), or 2.1% of GDP," he said. "The deficit will be funded through the issuance of state securities in the domestic market at the amount of 537.1 billion tenge, by external - 248.1 billion tenge, including 150 billion tenge - Eurobond issue."
In general, the government's debt as of January 1, 2013 amounted to 3.626.3 trillion tenge, the domestic debt share - 80 percent (or 2.896.9 trillion tenge), the external debt share - 20% (or 729.3 billion tenge).
"While issuing Eurobonds at the amount of 150 billion tenge, external government debt will hit 879.3 billion tenge, or 24.2% of the total portfolio of the government loans," Zhamishev said.
It was reported at a government meeting that a project has been worked out to finance the national budget deficit for 2013 by issuing state securities on foreign capital markets in terms of the current low base interest rates. According to the budget law, loans on behalf of the Kazakh government are being drawn through the Finance Ministry on the basis of the government's decision on each individual loan agreement or state emission securities. The Finance Ministry determines the amount, term and conditions of each issue of state securities.
"The increase in the budget deficit in the second half of 2012 by 203.5 billion tenge has led to a sharp rise in interest rates on state securities in the domestic market," he added.
According to the agency, as of January 22, 2013, the indicative cost of borrowing in foreign capital markets on five-year bonds was 2.01%. For comparison, the current rate on five-year state securities in the domestic market was 5.5%.
"If the decision is not made to issue Eurobonds, additional issue of state securities on the domestic market at the amount of 150 billion tenge will lead to pressure on state securities yield and increase the debt service cost observed last year," Zhamishev said.