Kazakhstan fixed income: The debt market is attractive, but the moment is not perfect

KAZAKHSTAN - Report 18 Oct 2023 by Evgeny Gavrilenkov

Uncertainty still prevails in Kazakhstan’s debt market. The increased exchange rate volatility is limiting the demand for securities denominated in tenge. The weakening of the national currency will lead to higher budget revenues in the remaining months of the year, but even under these conditions the budget deficit will be larger than planned. Under these conditions, the Ministry of Finance is likely to maintain an active borrowing policy, but it is likely that the financing gap would not be possible to cover without a new transfer from the National Fund. At the same time the government has abandoned plans to issue Eurobonds in 2023, postponing them until the middle of next year despite the relatively favorable market conditions. Potentially, both local government bonds and sovereign Eurobonds have good potential and look attractive to investors, but it is unclear when market conditions will be good enough to unlock this potential.

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