OCT. 5 2014 (The Conway Bulletin) – As well as boosting gas exports to neighbouring Iran, Turkmenistan now wants to increase electricity supplies. Under President Kurbanguly Berdymukhamedov, Turkmenistan has become a major energy exporter across the Middle East. Earlier this year it agreed to boost gas supplies to Iran.
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(News report from Issue No. 203, published on Oct. 8 2014)
OCT. 6 2014 (The Conway Bulletin) – Kazakhstan issued its first US-dollar sovereign debt since 2000 to finance state investments and contain a growing budget deficit.
The government hired Citibank, HSBC and JP Morgan to arrange the deal, which attracted large demand from investors, who purchased $2.5b in 10- and 30-year fixed- income securities.
After a year of significant changes in the banking sector and a 20% currency devaluation, Kazakhstan is not the safest country for financial speculation but analysts talked up the country’s strengths.
“The ministry of finance raised a similar sum in the local market last year, but this time the operation was denominated in dollars which attracted investors in a market hungry for yields,” Sabina Amangeldi, senior analyst at Halyk Finance in Almaty, told the Conway Bulletin.
“The position of the government is reassuring since the country has a net creditor position. The compliance with ICMA’s (nternational Capital Market Association) test clauses demonstrated Kazakhstan’s good will with respect with the global investment community.”
Kazakhstan seems to have seized perhaps the last moment to issue sovereign debt coupons, since the policy of tapering and a possible raise of the current minimal interest rates by the US Treasury in Washington would see US dollars move from emerging markets and back to the United States.
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(News report from Issue No. 203, published on Oct. 8 2014)
OCT. 7 2014 (The Conway Bulletin) – Georgia’s finance minister, Nodar Khaduri, said that he wanted to increase the monthly pension pay out next year by around 5%. Unlike many of its neighbours whose economies are suffering because of a slow-down in Russia’s sanction-hit economy, Georgia is experiencing something of a boom.
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(News report from Issue No. 203, published on Oct. 8 2014)
OCT. 31 2014 (The Conway Bulletin) – A 40% drop in the value of the rouble this year is placing extreme pressure on Russia’s main trade partners, including Kazakhstan, experts have said.
Banking analysts have said that it is increasingly likely the Kazakh Central Bank will have to follow the rouble and devalue its own tenge currency for the second time this year.
The Tengrinews website quoted Raimbek Batalov, director at Raimbek Group, as saying that the fluctuating value of the tenge was hurting exporters. Kazakh goods are now far too expensive for their main export market — Russia.
And reports have emerged from across Kazakhstan that people are rushing to banks to sell their tenge before an imminent devaluation.
Falling oil prices and sanctions imposed by the West have pressured the rouble while the Kazakh Central Bank has insisted on keeping the tenge pegged to the US dollar since its 20% devaluation in February.
Luca Anceschi, professor of Central Asian Studies at the University of Glasgow explained that the rouble was introduced in 1993 to reduce Kazakhstan’s dependency on the rouble. Instead, he said, the opposite has happened.
“The policies pursued since 1993, if anything, have de facto re-established such dependency,” he said.
Increased economic integration with the Eurasian Economic Union gives Kazakh President Nursultan Nazarbayev even less room to manoeuvre.
A second devaluation, to keep pace with Russia’s currency slide, must be approaching fast despite the Central Bank’s denials.
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(News report from Issue No. 207, published on Nov. 5 2014)
SEPT. 30 2014 (The Conway Bulletin) – The IMF cut its growth estimate for Armenia to 2.6% this year from 3.6% earlier and to 3.3% in 2015, down from an earlier estimate of 4.3%.The downgrades are in line with other agencies who adjusted Armenia’s growth figures downwards because of the impact of sanctions on Russia’s economy.
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(News report from Issue No. 202, published on Oct. 1 2014)
SEPT. 29 2014 (The Conway Bulletin) – Japan has signed a deal to help build local infrastructure projects in Azerbaijan such as improving basic drinking water access in villages, media reported. This may show that Japan is trying to increase its participation in the South Caucasus.
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(News report from Issue No. 202, published on Oct. 1 2014)
SEPT. 25 2014 (The Conway Bulletin) – Kazakhstan will issue a US dollar denominated bond later this year, its first since 2000, Reuters reported. Government officials have launched a roadshow to drum up support for the debt issue. These are difficult times, though, because of the knock-on effect of sanctions on Russia.
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(News report from Issue No. 202, published on Oct. 1 2014)
SEPT. 24 2014 (The Conway Bulletin) – The European Bank for Reconstruction and Development (EBRD) sold its 5% stake in Bank of Georgia.
The sale ends the EBRD’s mission to support Bank of Georgia after the 2008 Global Financial Crisis. It took control of the stake in 2012 after a financial aid package put together in December 2008 was converted into shares.
“The EBRD’s role in supporting Bank of Georgia in the aftermath of the 2008 crisis is now complete,” Reuters quoted Nick Tesseyman, the EBRD MD, as saying.
“The EBRD will continue to provide debt financing to Bank of Georgia going forward as part of our continued support to the Georgian financial sector.”
The Bank of Georgia is publicly listed on the London Stock Exchange.
In many ways the sale of the EBRD’s 5% stake in Bank of Georgia is a success for Georgia as a country. The EBRD would not have sold its stake if it didn’t think that the bank was stable enough and if there wasn’t enough investor interest in Georgia and its finance industry.
Bank of Georgia CEO Irakli Gilauri acknowledged this.
“This transaction illustrates the depth of support for the bank from international investors and signals increasing investor interest in Georgia’s capital market,” he said.
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(News report from Issue No. 202, published on Oct. 1 2014)
SEPT. 29 2014 (The Conway Bulletin) – Kazakhstan’s grain harvest is likely to top 17m tonne this year, media quoted the Kazakh agriculture ministry as saying. This is slightly down on 2013 but is more or less in line with early predictions. Grain has become an important commodity for Kazakhstan.
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(News report from Issue No. 202, published on Oct. 1 2014)
SEPT. 29 2014 (The Conway Bulletin) – The European Bank for Reconstruction and Development (EBRD) has agreed to lend Kazakhstan’s railway company $165m as part of its upgrade plan, media reported. This is important because it shows that Kazakhstan continues to attract investment despite declining economic growth rate predictions.
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(News report from Issue No. 202, published on Oct. 1 2014)