Kazakhstan Plans New $500 Million Panda Bond Offering — Bloomberg
The country's government is in talks to raise capital on the Chinese debt market
Demand for Kazakhstan's inaugural panda bond issue in May exceeded supply by more than double / Photo: Unsplash / Viktor Hesse
Kazakhstan is preparing to return to the Chinese debt market this year and is considering the possibility of issuing so-called panda bonds worth about $500 million as early as September, Bloomberg reports, citing sources.
The country's government is in talks with banks regarding the terms of a potential deal, sources told the agency. The final terms will depend on market conditions, they added.
Kazakhstan’s Ministry of Finance has confirmed that it is considering issuing panda bonds to diversify its sources of funding for the budget deficit. The final decision will depend on conditions in the Chinese interbank market and the need for external borrowing, the ministry said in response to a request from Bloomberg.
"The Chinese capital market offers borrowing opportunities at relatively low interest rates," the ministry noted. "The Chinese yuan has remained stable amid global economic uncertainty, which reduces currency risks for borrowers."
Context
Kazakhstan, Central Asia’s largest oil producer, issued its first panda bonds in May for 3.4 billion yuan ($500 million) with a three-year maturity. Demand for the bonds more than doubled the supply, allowing the country to set the lowest coupon rate among BBB-rated sovereign issuers in China’s domestic bond market, the Ministry of Finance reported. The rate was just 1.9% per annum—0.6 percentage points higher than the average yield on China’s own government bonds.
Kazakh borrowers are generally expanding their presence in the yuan-denominated debt market, according to Bloomberg. Government entities, including the Development Bank of Kazakhstan and the national company KazMunayGas, have already entered the offshore market for so-called dim sum bonds in Hong Kong.
China has become Kazakhstan’s largest trading partner, surpassing Russia. Bilateral trade has reached record levels in recent years, driven by energy, metals, agriculture, and the development of cross-border infrastructure as part of China’s Belt and Road Initiative.
In February, S&P Global Ratings affirmed Kazakhstan’s credit rating at BBB- with a positive outlook. The country maintains investment-grade ratings from all three leading agencies.
This article was AI-translated and verified by a human editor
