Kazakhstan placed Sovereign Eurobonds worth $1.5 bln

KAZAKHSTAN - In Brief 06 Oct 2024 by Evgeny Gavrilenkov

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Last week, Kazakhstan issued 10Y Sovereign Eurobonds for the first time since 2015. The issue was $1.5 bln, and the spread over the US Treasuries was 88 bps. The main purpose of this borrowing was the refinancing of the bond, which is due to mature on Oct 14 (and the amount is the same - $1.5 bln). The total demand almost reached $6 bln, and the interest rate was 4.714%. Generally, the authorities prefer to borrow from domestic sources if it concerns financing the budget deficit (either from domestic borrowings or the usage of the National fund) rather than raise money from abroad. At the same time, the cost of funding on the global market looks acceptable, and we cannot rule out that in the years to come, the Kazakh government may use this opportunity more often. However, the main uncertainty and risks stem from the exchange rate. In turn, the latter heavily depends on the oil price, which, currently, looks far from its equilibrium and seems too strong. In the short term, given the upcoming repayment of Kazakhstan-24, we don’t expect any impact on the FX market from the aforementioned issuance.