Kazakhstan
Inflation in December 2020 remained at 0.9% mom. In annual terms, price growth accelerated to 7.5% from 5.4% yoy in December 2019, which is the highest metrics since 2017. Actual inflation was close to our forecast of 7.3% yoy. See more - Inflation accelerated at the end of 2020.
The Ministry of Finance of Kazakhstan raised T14.9bn on the market last week, having placed 3.4-year bonds at 10%. At the announced 15 bn tenge placement, the total applications for the purchase of those bonds amounted to T39.3bn tenge. 74.4% of the bonds was bought by commercial banks of Kazakhstan.
The last time the Ministry of Finance placed bonds with the same maturity (3.2 years) in mid-November 2020 at 10.39%. The decline in profitability was due to the stabilization of the global economic situation and the decline in devaluation expectations for the Kazakh currency in response to rising oil prices. To top it all, the inflation at the end of 2020 (7.5%) was much lower than the forecasts of the National Bank (8-8.5%).
In 2020 the domestic market money raise of the Ministry of Finance totaled circa T2.8trn, evidencing double increase compared to the previous year. It should be noted that the volume of placements of the Ministry of Finance on the domestic market increased significantly for the second year in a row. In 2021, the Ministry of Finance plans to raise T1.9trn in the domestic market.
On the secondary bond market of the Ministry of Finance of Kazakhstan there was a sluggish activity – the only transaction with 2-year maturity bond with the yield of 9.9% was performed. Meanwhile, the previous week there were trades on 1-year bonds at the yield at 9.76% and on 8-year at 9.9% on the secondary market.
Corporate sector. On Friday, specialized trade was held for the placement of 1.8-year bonds of Kazakhstan Sustainability Fund. As a result of the trade, bonds placement amounted T4.5bn with a yield to maturity of 10.49%. With the announced T4.5bn, the total applications to purchase those bonds amounted to T17bn. The whole placement was bought commercial banks of Kazakhstan. We note that in December the Kazakhstan Sustainability Fund placed bonds with the same maturity with the yield of 10.78%.
Fincraft Group LLP repurchased its NCOMb1 (K2D00005949) bonds worth of T36.1bn and NCOMb2 (K'2P0006190) worth of T25bn at face value. Last week, Eastcomtrans LLT announced a repurchase of its Eurobonds prior to scheduled date on February 5, 2021. During 2019, the issuer repurchased its bonds at a total of $1.5mn, and in 2020 at $4.5 mn. At the time of the repurchase, there were $26mn in circulation. In April 2013 the company's Eurobonds totaled $100 million.
Russian Federation
According to the Central Bank of the Russian Federation, annual inflation was 4.9% in December this year. As per Central Bank's forecast, annual inflation in 2021 will be 3.5-4.0% and in the future will hover at 4%.
At the end of 2020, the Ministry of Finance of the Russian Federation made a record high of 5.3 trn rubles placement of its federal loan bonds (FLB) verses 2.1 trn rubles in 2019. Initially, net money raise in the domestic market in 2020 was planned circa 1.74 trn rubles while the gross - 2.32 trn rubles.
Uzbekistan
Inflation in December 2020 decreased from 15.2% yoy last year to 11.1% yoy. It was primarily due to the pandemic impact on economy (0.4% yoy GDP for 9M2020, 5.9% yoy for (9M2019), as well as a significant decrease in inflation of paid services (+7.1% yoy in 2020, +15.2% yoy in 2019) amidst slowing food prices (+15.3% yoy in 2020, +18.6% yoy in 2019) and non-food goods (8.8% yoy in 2020, 10.9% yoy in 2019). Under prevailing economic deceleration and slowing inflation (projected at 8%-11%) the regulator is likely to continue easing the monetary policy after lowering the key rate from 16% to 14% in 2020.
Turkey
On December 24 of 2020, the Central Bank of Turkey hiked the key rate by 2pp to 17% per annum. Starting from July 2019, the Central Bank of Turkey dynamically cut the key rate from 24% to 10.25% until November 2020, when the regulator made an abrupt hike to 15%. This decision was taken amidst a heavy weakening of the turkish lira. Its historical low was registered on November 6 - 8.5876 lira per dollar. The tightening of monetary conditions is intended to have a deterrent impact on inflation, which accelerated from 11.89% yoy in October to 14.60% yoy in December last year. Along with the impact of inflation it will support the FX rate of the national currency. The volte-face in the monetary policy and the commitment to maintain tough monetary conditions in the future amidst the high inflation expectations will increase investor confidence in the policy of the Central Bank of Turkey and evidence its growing regulatory independence.
