Kazakhstan
Bonds of the Ministry of Finance of the Republic of Kazakhstan. An increased demand for tenge bonds was observed last week. The Ministry of Finance of the Republic of Kazakhstan placed 3 bond issues for a total of KZT82 billion. On January 18, 11-year bonds were placed in the amount of KZT14.4 billion with a yield of 10.21% (the yield of placement in September 2020 was 10.5%). On January 20, the Ministry of Finance raised KZT28bn by placing 1-year bonds at a rate of 9.49%. The demand for the Ministry of Finance securities exceeded the announced volume 10 times. As recently as at the end of November 2020, the Ministry of Finance placed bonds with a similar maturity (1.3 years) at a rate of 10%. On January 22, 2.5-year bonds worth KZT40bn were placed with a yield of 9.58%. Demand exceeded supply 11 times. Compared to the placement two months ago, the yield decreased by 70bp.
Over the last three weeks from the beginning of January, the Ministry of Finance raised KZT120.5bn on the market, while the plan was KZT110bn for the whole month. The high demand for the Central Bank of the Ministry of Finance contributed not only to overfulfillment of the plan for the amount of borrowing, but also made it possible to attract funds at an attractive rate.
The decrease in the yield on tenge bonds of the Ministry of Finance occurs as a result of a decrease in the risks of a significant weakening of the tenge and an increase in non-residents' interest in tenge government bonds of the Republic of Kazakhstan.
Notes of the National Bank. Last week, the total volume of placement of the National Bank's notes amounted to KZT471 billion. On January 18, the National Bank placed 28-days. notes in the volume of KZT371bn with a yield of 9.01% (9.1% on January 11) and January 20, 182-days. notes in the volume of KZT100bn with a yield of 9.63% (-11bp to the previous placement). For semi-annual notes, there was a record demand in the amount of T602 billion, the yield fell back to the level of June 2019. At the same time, the National Bank redeemed notes in the amount of T300 billion last week. We note a significant increase in the volume of holding notes of the National Bank by non-residents (more than by T100 billion per week) , as a result of which their share increased from 9.9% to 12.5%.
Today, as we expected, the National Bank decided to keep the base rate at 9% +/- 1%. The adoption of this decision was justified by the accelerated inflation rates at the end of last year to 7.5% y / y. We expect inflation to slow down to below 7% starting from April this year, as a result of which the National Bank may make the long-awaited decision to cut the base rate.
Corporate issuers' instruments. On Friday, specialized trades were held on the placement of 5-year bonds of Kazakhstan Stability Fund JSC in the amount of 38.3 billion tenge with a yield to maturity of 10.65%. With the announced volume of placement of 35 billion tenge, the total volume of applications for the purchase of these bonds amounted to 57 billion tenge (demand to supply 171%). At the end of December 2020, Kazakhstan Stability Fund JSC placed bonds with a similar maturity (5.0 years, 9.5 billion) with a yield of 10.94%. Thus, the decrease in profitability for the month reached 29bp.
Last week, Kazakhstan Mortgage Company bought back its 8.6-year bonds in the secondary market for KZT26bn (yield 9.99%) and 8.4-year bonds for KZT40bn (yield 9.75%).
Regional Market
The RF Ministry of Finance on January 20 placed OFZ-PD (with constant income) in the amount of 20 billion rubles. with a maturity date of July 16, 2025 and a weighted average yield of 5.55% per annum. The yield on the previous OFZ-PD issue with a similar maturity was 5.30% per annum.
JSC Gazprom entered the international capital market for the fifth time in the last 12 months, placing $ 2bn Eurobonds with a yield of 2.95% and an 8-year maturity. At the peak of demand, the investor order book reached over $ 4bn. The volume of this issue corresponds to the volume of issues last year, when 10-year bonds for $ 2bn were placed in February, 5-year bonds for 1bn euros in April, 7-year bonds for $ 1bn in June and perpetual bonds for 1.4bn euros and 1bn euros. in the fall. In 2021, Gazprom plans to borrow 6 billion euros on foreign markets.
On January 18, the Ministry of Finance of Georgia at an auction of treasury securities issued benchmark bonds with a nominal value of 25 million lari ($ 7.6 million), maturity of 10 years and an average weighted rate of 8.54% per annum. The total demand amounted to 45.5 million lari ($ 13.7 million). The previous issue with a similar maturity, carried out at the end of October 2020, yielded 8.8%.
On January 20, the Turkish Ministry of Finance announced the sale of 2-year zero-coupon government bonds and 5-year bonds indexed at the Turkish lira overnight reference rate (TLREF) for a total of 6 billion lira ($ 809 million) in two auctions held on January 19, the Ministry sold government bonds in the amount of 1.5 billion lira ($ 203 million) with maturity on April 13, 2022, with a yield of 19.39% per annum. The ministry also placed bonds for 4.5bn lira ($ 606mn) maturing on January 14, 2026 at a yield of 4.28%.
