Kazakhstan is planning a comeback to international debt markets by issuing 150 billion tenge ($996 million) of sovereign Eurobonds in the first half of 2013, Finance Minister Bolat Zhamishev said on Tuesday.
The planned move is aimed at taking advantage of low international interest rates to help bridge the country's fiscal gap, Zhamishev told a cabinet meeting.
The oil-rich country, Central Asia's largest economy, last issued sovereign Eurobonds in 2000. That paper, worth $350 million, was redeemed in 2007.
"Taking into account low interest rates (on external markets) and the country's stable macroeconomic situation, we consider it possible to launch sovereign Eurobonds in the first half of 2013 to finance the budget deficit and set a benchmark for Kazakh issuers," Zhamishev told the meeting. He said the bonds would have maturity of five years, and it would take eight weeks to prepare the legal framework for the issue.
The cabinet swiftly voted to approve the plan. Zhamishev said state-controlled companies would borrow abroad later in 2013 to refinance their Eurobonds. He gave no further details.
Kazakhstan's 2013 budget envisages a fiscal gap of 785 billion tenge, or 2.1 percent of its gross domestic product. With the planned issue of a 150-billion-tenge Eurobond, the external debt of the government would comprise 879.3 billion tenge ($5.8 billion), or 24.2 percent of the total portfolio of government borrowings, official data show.
The widening of the fiscal gap by 203.5 billion tenge in the second half of last year boosted yields on government securities issued on the domestic market, the government said on Tuesday, when explaining the reasons for new borrowing abroad. It said the rising yields would significantly increase the cost of debt servicing, given the total volume of government securities in circulation of 2.897 trillion tenge ($19.2 billion).
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