Kazakhstan Eyes Return to Panda Bonds With $500 Million Deal

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Or sign-in if you have an account.(Bloomberg) — Kazakhstan plans to return to the yuan debt market this year as Central Asia’s largest oil producer seeks to tap cheaper financing from China.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe government has started discussions with banks about raising the equivalent of about $500 million in a sale of panda bonds as early as next month, according to people familiar with the matter. The parameters of the potential deal will depend on market conditions, said the people, who declined to be identified as the plans aren’t public.The Kazakh Finance Ministry said it’s considering a panda bond sale to diversify sources of funding the budget deficit. A final decision on a deal will depend on the situation on the Chinese interbank bond market and the need to finance the deficit from external sources, the ministry said in response to Bloomberg questions.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“The Chinese capital market currently offers opportunities to borrow at relatively low rates,” the Astana-based ministry said. “The Chinese yuan has demonstrated stability amid global economic uncertainty, reducing currency risks for borrowers.” Kazakhstan deepened its push into China’s capital markets this year after raising 3.4 billion yuan ($500 million) in a debut three-year panda bond in May. Demand topping twice the amount offered enabled the lowest coupon to be set for a BBB-rated sovereign issuer in China’s onshore bond market, the Finance Ministry said at the time.The transaction underscored Astana’s efforts to diversify funding sources and strengthen financial ties with Beijing. The sovereign’s inaugural panda bond marked a step in broadening access to Chinese investors and supporting the Kazakh government’s longer-term objective of increasing the use of the yuan in trade and financing.China has overtaken Russia as Kazakhstan’s largest trading partner, with bilateral trade reaching record levels in recent years, driven by energy, metals, agriculture and expanding cross-border infrastructure links under Beijing’s Belt and Road Initiative. Kazakhstan has also become a key transit land route for Chinese goods moving to Europe through the so-called Middle Corridor.Kazakh borrowers have been steadily increasing their presence in yuan debt markets since last year. State-backed issuers, including Development Bank of Kazakhstan and KazMunayGas National Co., have tapped the offshore dim sum bond market in Hong Kong. Kazakhstan has investment-grade ratings from all three major agencies, including a score two notches above junk at Fitch Ratings. S&P Global Ratings maintained a positive outlook on Kazakhstan’s BBB- credit score in February.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.