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14 February 2019

Historical placement of eurobond by Uzbekistan on the London Stock Exchange

Uzbekistan successfully placed five-year Eurobonds for $ 500 million and 10-year bonds for $ 500 million in 14th February 2019. The yield of five-year securities was estimated at 4.7%, ten-year securities – at 5.3%. The total amount of applications at the peak reached $ 8.5 billion, which made it possible to revise prices – initially they were 5.3% and 6% respectively.

The placement turned out to be in demand and well diversified, since about 150 applications from institutional investors were received.

In terms of geography, British investors accounted for 39% of five-year bonds and 32% of ten-year bonds, americans – 23% and 31%, investors from mainland Europe bought 32% and 37%, and the remaining 6% and 10% were taken by Asian investors.

The exchange press service notes that “The success of the debut issue of Eurobonds reflects investor confidence in the solid economic foundations of Uzbekistan, the progress of reforms and debt management strategies”.

Minister of Finance Jamshid Kuchkarov in an interview with Bloomberg, said that the country issues eurobonds primarily to create a benchmark, rather than to raise funds.

The government believes that it can remedy the situation by placing Eurobonds, thereby creating a credit benchmark for companies.

By borrowing funds abroad, the government will set an example for local businesses and encourage them to actively raise funds for business expansion among other things. In addition, it will help foreign investors to discover Uzbekistan.

Together with the government of Uzbekistan, two banks of Uzbekistan plan to enter the international debt markets. Possible candidates are Asaka Bank, Uzpromstroybank, Ipoteka Bank, the National Bank. The Uzbekneftegaz company also plans to enter the debt markets, which is expected to undergo serious reforms.