DUSHANBE, SEPT. 7 2017 (The Conway Bulletin) — Investors snapped up Tajikistan’s first sovereign bond issue, surprising Central Asia analysts who said the auction came with huge risk.

The $500m Eurobond issue came with a coupon of 7.125%, which analysts said was around 200 basis points more than the price paid by other frontier economies for debt. It is set to mature in 2027.

Tajikistan, considered the poorest of the Central Asian countries with an economy reliant on remittances, has said it wants to raise the cash to pay for construction of the giant Rogun Dam.
Lutz Roehmeyer, director at Landesbank Berlin Investment, invested in some of the debt.

“They don’t want to splash out the money on any nonsense, they want to build a dam and produce electricity which would be a massive boost for the local economy,” he was quoted by Reuters as saying. The Rogun dam is part of a wider project to supply electricity generated by hydroelectric power to Afghanistan and Pakistan.

Tajikistan has a reputation for corruption and analysts warned that investing in Tajikistan was a gamble. Last year, the government bailed out its commercial banks.

Max Lambertson of the EIU said yields on investment grade debt around the world were currently so poor that investors were looking at far riskier options to find profit.

“Investors typically show little interest in Tajikistan, which has a poor record with foreign investors and multilaterals,” he said.

ENDS

— This story was first published in issue 343 of The Conway Bulletin on Sept. 15 2017