Development Bank of Kazakhstan's bonds among most effective tools to increase lending to economy

Business Materials 4 March 2020 12:24 (UTC +04:00)
Development Bank of Kazakhstan's bonds among most effective tools to increase lending to economy

BAKU, Azerbaijan, March 4

By Nargiz Sadikhova - Trend:

Bonds placement of Development Bank of Kazakhstan (DBK) is one of the most effective tools of long-term borrowings used by DBK to replenish liquidity and increase in the volume of lending to the economy, Managing Director of DBK Botagoz Abisheva told Trend.

Abisheva said that given the fact that DBK specializes mainly in financing of large projects, the funds raised through the issuance of Eurobonds in significant amounts allow lending to businesses on favorable terms for entrepreneurs.

“Moreover, as you know, DBK is the main operator of the State Program of Industrial and Innovative Development (SPIID). The terms of the latter stipulate that DBK must "mix" funds from budget target programs with funds raised on market terms, 50:50 ratio,” she said.

Thus, the funds received from placement of bonds are directed to the implementation of the market component of such programs.

“Simply put, DBK attracts the necessary additional amounts of medium- and long-term liquidity in tenge from the international capital market by issuing tenge-denominated Eurobonds,” Abisheva said.

Talking about the reasons for DBK’s issuance of Eurobonds, Abisheva once again reminded that DBK is an operator of country’s state programs.

“DBK is an operator of state programs, where it is stipulated that for every tenge of budget money, DBK must add tenge at the expense of money raised on market conditions (not from the state). Further, budget and market funds are mixed, which allows the borrower to get a loan on acceptable terms, which, characteristically, differ favorably from those offered by second-tier banks. Moreover, in some cases, this approach is the only way for an entrepreneur to get access to long-term financing necessary for the implementation of one or another investment project, which is the main prerequisite for this program,” she explained.

Talking the specifics of national currency denominated bonds issuance Abisheva said that Eurobonds of such type are issued by issuers from many emerging markets, including Russia and other CIS countries.

“The fact that against this background, DBK successfully places the third consecutive issue of Eurobonds denominated in tenge on fairly favorable terms confirms that investors have a steady interest in tenge-denominated tools,” she said.

Abisheva added that the nominal value of one bond is 50 million tenge ($131,154) and both individuals and legal entities can buy DBK securities.

On Feb. 7, 2020 Development Bank of Kazakhstan (DBK) announced a third issue of Eurobonds denominated in Kazakh tenge worth 62.5 billion tenge ($165.5 million).

DBK is a national development Institute for the modernization and development of non-resource and infrastructure sectors of the economy of Kazakhstan, established in 2001.


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