The Ministry of Finance of the Republic of Kazakhstan placed government short-term bonds (MEKKAM-12) worth 11.1 billion tenge (more than $26.8 million) on the Kazakhstan Stock Exchange (KASE) on Monday.
Fulfilled bids amounted to about 119 million bonds. Maturity date is on May 15, 2021, with a yield of 10.45%. According to the Ministry of Finance, the demand for the declared volume was at 230%.
Judging by the data from Central Securities Depository JSC, more than half (58.4%) of the total bid volume was purchased by second tier banks, almost a quarter (23.5%) was by other institutional investors, and 18.1% was by other legal entities.
Taking into account previous bond placements, the full volume of MEKKAM-12 bonds, issue 148 (KZK100000241) amounted to 3.357 billion bonds for a total nominal value of 335.76 billion tenge (about $810 million).
It should be noted that by the end of this year, the Ministry plans to issue about one trillion tenge ($2.4 billion) worth of government stocks (with a maturity date from one to three years). This kind of maturity date, according to the National Bank of Kazakhstan, is the most attractive for investors.
Andrey Tsalyuk, Deputy Chairman of the Management Board at KASE, earlier said that the yield of short-term ministry stocks placed at KASE varies from 9.47% to 12% per annum.
“I don’t even remember the last time the Ministry offered such a yield… This is the result of many meetings of representatives of the Ministry, the National Bank, and second tier banks at the end of the last year and during this year. It turns out that the banks and the Ministry are accommodating each other. We can see a price consensus. It resulted in a big increase in demand, and the Ministry government stocks now truly compete with the National Bank bonds, and the demand for MEKKAM bonds from private investors increased significantly. Hence, we are observing positive changes on the market,” Tsalyuk said at the press conference following the results of KASE’s work in the first half of the year.
Updated plan of government bond issue by the Ministry for year 2020 includes borrowings of 1.9 trillion tenge (more than $4.5 billion).
It bears reminding that on July 20, the National Bank of Kazakhstan lowered the interest rate from 9.5% to 9%, as well as narrowed the cap and floor from +/– 2 percentage points to +/– 1.5 percentage points.
* 1 USD = 414.09 KZT at the National Bank's rate on July 27.