LONDON Jan 17 An ad hoc group of
creditors holding Eurobonds issued by Kazakhstan's BTA Bank said
on Tuesday they would appoint a formal committee after the bank
missed a 10-day grace period to pay $160 million in bond coupons
and fell into official default.
The default on the bank's $2 billion 2018 Eurobond comes
just 18 months after a first round of restructuring cut the
bank's debt by two-thirds. Investors are enraged as they contend
that BTA, owned by Kazakhstan's $78 billion sovereign wealth
fund, has enough money to pay debt.
"The ad hoc group of senior creditors is very disappointed
that BTA has chosen not to pay the coupon despite the fact that
it has ample liquidity to do so. We are now entering a process
of appointing a formal committee," the group said in a
The group, which owns a quarter of outstanding 2018 BTA
Eurobonds, told Reuters last week it was considering
accelerating the entire $2 billion payment, which would enable
other creditor classes also to demand immediate debt repayment
from BTA. That could trigger $8 billion worth of debt.
The creditors said the default would damage Kazakhstan in
the eyes of foreign investors. The oil-rich country has received
over $120 billion in investment since independence in 1991.
"This development will undermine investor confidence in the
Kazakh banking system and have a systemic impact," the statement
said. "It also casts doubt over the government's support of
foreign creditors, despite the goodwill these creditors have
shown in the past."
(Reporting by Sujata Rao; editing by Sebastian Tong)