Kazakhstan shows off wares to sceptical world

October 20, 2011

Kazakh officials meet in London today for the annual Kazakhstan Business Forum, and may find it a harder sell than in the past.

Although oil prices have been strong and the central bank has kept the tenge stable, investors are worried that the country may be heading for more trouble with its banking sector.

The debt of Kazakh bank BTA, the largest of four Kazakh banks to default in 2009,  was restructured last year and the bank is majority-owned by sovereign wealth fund Samruk-Kazyna.

But there have been nerves over coupon payments and although these payments have all been met, those worries are reflected in the price of BTA’s July 2018 dollar Eurobond, launched only last year and trading at a mere 48 cents on the dollar.

“The non-performing loan level has declined significantly from 40 percent at the peak of the crisis but remains very high at 27 percent, as at Sept 1,” BNP Paribas analysts write in a client note.

The country is also looking to raise more cash in the middle of next year through its “People’s IPO” — floating shares in state companies like Air Astana, the national grid company and oil transportation firm KazTransOil.

But the state of world markets may make that timetable hard to meet.

Kazakhstan’s FX reserves are falling as it struggles to hold its currency intact and some analysts see the possibility of  a rate hike, bucking the trend for most larger economies to cut rates.

However, frontier markets brokerage Exotix remains upbeat on the banking sector at least, saying BTA may come out with a new strategy in the next few weeks.

“Another debt restructuring is not on the agenda as Samruk-Kazyna is likely to continue its support of the bank.”








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