By Nick Tattersall
ISTANBUL, May 10 (Reuters) - Oil-rich Kazakhstan will return to global bond markets this year with an issue of up to $1 billion and has invited banks to apply to manage the deal, Finance Minister Bolat Zhamishev said on Friday.
Kazakhstan has one of the lowest public debt ratios in emerging markets and its last sovereign Eurobond matured in 2007. Zhamishev said a new bond would be aimed at creating a benchmark for corporate borrowers.
“In 2013 we would like to go back to the borrowing market and I think that we will probably borrow up to $1 billion, it will be in U.S. dollars,” he told the annual meeting of the European Bank for Reconstruction and Development (EBRD).
“We are going to the external markets not for money but for credit, for loans, for benchmarks and in order to make ourselves present in this market.”
He declined to comment on what kind of yield Kazakhstan considered appropriate. JPMorgan’s global emerging dollar bond index shows Kazakh risk trading around 245 basis points above Treasuries.
That is based on the yields of state-run firms such as oil producer Kazmunaigaz, which are eligible for the sovereign index.
Kazmunaigaz last month raised $3 billion via a dual-tranche bond, paying 5.75 percent over 30 years and 4.40 percent over 10. The order book was a healthy $14 billion.
Zhamishev said the government had started looking for banks to lead the sovereign deal. “We sent (request-for-proposals) to banks and legal consultants,” he said.
Kazakhstan, rated BBB+/Baa2 by ratings agencies, is a leading oil producer as well as a major exporter of industrial metals, uranium and grain. Its economy grew by 4.5 percent year on year in the first quarter.