January 20, 2014 / 2:51 PM / in 4 years

Kazakh Alliance bond up on hope of better debt restructuring terms

LONDON, Jan 20 (Reuters) - The dollar bond of Kazakhstan’s Alliance Bank, controlled by the oil-rich nation’s sovereign wealth fund, rose on Monday as investors awaited the terms of the banks’ second debt restructuring since the global financial crisis.

Alliance said on Monday it would meet creditors in London on Wednesday. At a similar meeting last month the bank said it would not pay out on a series of recovery notes.

Alliance’s dollar bond due 2017 rose 1.5 points to 41.5 cents on the dollar, according to Thomson Reuters data.

The bond has slumped from a high of 93 cents set last May, due to expectations of the restructuring. But investors are hoping to recover around 50 cents on the dollar, citing the 44 percent recovery rate on another Kazakh bank, BTA, which they said was in a worse financial condition than Alliance.

“Worst case for me is a 50 percent haircut and we are already trading in the 40s,” said Andre Andrijanovs, corporate debt strategist at emerging markets broker Exotix.

“There are some indications that the new ownership want to do a quick liability management exercise -- in that case they need to come out with reasonable proposals.”

Timur Isatayev took over as chief executive officer in Alliance in October while Kazakh billionaire Bolat Utemuratov is in the process of consolidating his takeover of Alliance and one other local bank. (Reporting by Carolyn Cohn and Sujata Rao; Editing by Stephen Powell)

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