Demand for U.S. dollar-denominated European bonds has doubled
“Kazakhstan Development Bank” (DBK, a subsidiary of Joint Stock Company “State Management Holding Company” Baiterek”) Collect global procurement requisitions Two new issuances of Eurobonds. Provided investors with the fourth tranche of Euro bonds denominated in tenge with an issuance of 100 billion tenge. The maturity of the securities is 5 years, and the coupon rate is 10.95% per annum. All settlements, including the payment of principal and interest, are settled in U.S. dollars. The Kapital.kz Business Information Center has learned of this in the bank’s press service.
Investors also received the seventh US dollar-denominated European bond issuance with a total issuance of US$500 million. The maturity of the securities is 10 years, and the coupon rate is 2.95% per annum. The transaction will be settled on May 6, 2021.
According to DBK, investor demand for Eurobonds declared denominated in tenge is 151%. The demand for the World Bank’s dollar-denominated European bonds has more than doubled the supply.
“DBK has collected global applications for the purchase of two Eurobonds for US$500 million and 100 billion tenge. This is a successful transaction, indicating high interest in bank bonds. DBK is a reliable issuer and trusted by foreign investors. The national currency of Kazakhstan. This is very important for banks and their customers because DBK specializes in providing loans for large projects, and the funds raised in this format will help banks provide loans to the real sector of the country’s economy. Abay Sarkulov (Abay Sarkulov).
Bank bonds are issued geographically in 24 countries/regions around the world, and for the issuance of European bonds, most of the recommended issuance is allocated to investors from the United States (50%) and the United Kingdom (32%), and the rest Investors from Europe (17%) and Kazakhstan (1%). As for bonds denominated in U.S. dollars that benefit Kazakhstan investors (36%), the recommended trading volume accounts for the largest portion, with U.S. investors 32%, European investors 19%, and Europe 19%. United Kingdom (9%), from Asia and other countries; Middle East and North Africa (4%). In total, more than 130 investors from all over the world participated in the two issues.
As part of the DBK roadshow, on the eve of the opening of the order book, the International Investor Conference was held in the form of individual and group video conferences from April 26 to April 28.
The oversubscription of orders makes it possible to determine the final final yield at a price of 3% per year, which is DBK’s record low yield and the lowest yield in USD among newly issued issuers with maturity dates. More than 10 years in the CIS countries. At the same time, the minimum spread (43 basis points) between the yield to maturity of the firm bond and the yield curve of Kazakhstan government securities during the entire historical period of the issuance of tenge Eurobonds was determined.
Regarding the tough Eurobonds, it is also worth noting that the earlier DBK has issued three bonds issued in the tough Eurobonds. The initial issuance of Eurobonds was 100 billion tenge, which was sold to investors in December 2017, 100 billion tenge-62.5 billion tenge in April 2018-February 2020.
The transaction was organized by JP Morgan Chase, Citigroup, VTB Capital, Halyk Finance.