UPDATE 1-Kazakh BTA says has enough cash for upcoming coupon

Tue Jun 21, 2011 9:16am EDT

Related Topics

* $166 million coupon payment due end-June

* Bank says liquidity sufficient to meet all obligations

* Preparing mid-term growth plan with main shareholder

* Bonds sold off in recent days

(Adds CEO, analyst, background)

By Sujata Rao and Robin Paxton

LONDON/ALMATY, June 21 (Reuters) - BTA , Kazakhstan's third-largest bank by assets, said it had enough money to meet an upcoming bond coupon payment of $166 million without affecting day-to-day operations.

Addressing fears among investors it might default on the end-June coupon payment, BTA said on Tuesday it had enough short-term liquidity to fulfil all its obligations "in a full and timely manner".

Bonds in the bank have sold off heavily in recent days on fears BTA, owned 81.5 percent by Kazakhstan's sovereign wealth fund, would be unable to pay the coupon. Yields on the bonds which mature 2018 hit a record high near 20 percent on Monday.

BTA said in the Russian-language statement it had cash holdings of $347 million, or 2.6 percent of its current assets, as of June 20 -- more than adequate for the upcoming coupon.

"We knew that, financially, they do have the liquidity to cover short-term liabilities. What we needed to see was whether they would have the willingness to pay," said Mariya Gancheva, emerging corporate debt strategist at Mitsubishi UFJ Securities in London.

"Today's statement shows the willingness is there."

LIFE SUPPORT

BTA, the biggest of four Kazakh lenders to default in 2009, reduced its net debt to $4.2 billion from $12.2 billion through a restructuring programme completed last year.

But investors were disappointed by its latest audited results, which indicated it would need to stay on life support from the sovereign wealth fund, Samruk-Kazyna, longer than expected.

"The best evidence of the bank's ability to fulfil its promises was the successful restructuring of its obligations," BTA Chief Executive Anvar Saidenov said in the statement.

"Therefore the bank believes it has the right to count on adequate relations and trust from its respected investors."

Investors have also expressed concern in recent weeks about the level of support that Samruk-Kazyna, headed since April by the president's son-in-law Timur Kulibayev, will continue to provide to BTA.

In an attempt to reassure investors, BTA said it was working with the wealth fund to formulate a medium-term business plan.

"Together with Samruk-Kazyna, its main shareholder, the bank is continuing targeted work on preparation of a medium-term business model which should allow for the stable development of BTA," Saidenov said.

Gancheva said: "Given the substantial amounts they have invested to date in BTA, one would assume they are likely to provide support. However, they have not explicitly stated anything yet."

The bank asked Britain last month to arrest its former head, Mukhtar Ablyazov, from whom it is seeking billions of dollars of compensation for alleged misappropriation.

Ablyazov, who fled to London in 2009, denies the charges. (Editing by David Holmes)

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