SEPT. 26 2013 (The Conway Bulletin) — Kazakhstan will delay the issue of its long-muted $1b Eurobond until next year, Kuat Akizhanov, head of the ministry of finance’s borrowing department said in an interview with local media. Kazakhstan, which has not issued a Eurobond since 2007, has been talking about a sovereign debt issue throughout the year.
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(News report from Issue No. 154, published on Oct. 2 2013)
SEPT. 18 2013 (The Conway Bulletin) — Georgia halved its prediction of foreign direct investment this year, a crucial pillar of the Georgian economy. In an interview with Reuters, Georgian finance minister Nodar Khaduri said that political uncertainty after a change of government in 2013 and a presidential election next month were worrying investors.
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(News report from Issue No. 153, published on Sept. 25 2013)
SEPT. 23 2013 (The Conway Bulletin) — Kim Kardashian, the 32-year-old Los Angeles-based ethnic Armenian, is best known across the globe for starring in a reality TV show. Now she’ll also be known, in some circles at least, for lending her name to Armenia’s inaugural sovereign debt issue.
Armenia’s $700m Eurobond issue on Sept. 23, unofficially dubbed the ‘Kardashian bond’, did rather well. This was Armenia’s first sovereign debt issue and a real test of investors’ confidence in the country and appetite for risk in the South Caucasus.
Armenia’s government had said it needed to raise the cash to pay back a $500m loan it borrowed from Russia in 2009 to weather the global financial crisis.
It’s been a busy, somewhat controversial, year for Armenia with a disputed presidential election in February and a surprise decision last month to eschew closer ties with the EU to instead join Russia’s Customs Union. The economy, too, has caused some concern with inflation hovering around 9%, far above the Central Bank’s target.
Regardless, investors warmed to Armenia’s Kardashian bond and the initial yield on the 7-year bond was shortened to 6.25% from 6.375%, according to Reuters.
Not a bad debut on the sovereign debt market for Armenia and Kim Kardashian.
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(News report from Issue No. 153, published on Sept. 25 2013)
SEPT. 20 2013 (The Conway Bulletin) — DemirBank, one of Azerbaijan’s biggest banks, estimated its loan portfolio would grow by 16% by the end of 2014, Trend news agency reported quoting the bank’s deputy chairman Rauf Akhundov. Mr Akhundov’s assessment is another sign that Azerbaijan’s economy has recovered from the 2008/9 global financial crisis.
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(News report from Issue No. 153, published on Sept. 25 2013)
SEPT. 11 2013 (The Conway Bulletin) — When Kazakh President Nursultan Nazarbayev announced the Kashagan oil field discovery in 2000 he described a future for Kazakhstan as one of the great oil producing nations.
Exploiting Kasahagan, he said, would mean Kazakhstan becoming one of the top five oil exporters in the world.
Now, after a decade of delays and a five-fold rise in the cost of the project to $50b because of complex technical problems and squabbling between the partners, Kashagan has finally delivered its first oil.
But that doesn’t mean Kazakhstan has now propelled itself into the Premier League of global oil exporters.
Kashagan may have estimated recoverable reserves of 13b barrels of oil and be touted as the largest oil find in 30 years but production, initially at least, will be modest before rising to 350,000 barrels per day.
This will rise to a mightier 1.5m barrels per day but it is still down on the 3m that was touted at first.
Even so, despite the problems, Kashagan will shape oil production in Kazakhstan for years.
The consortium developing Kashagan is made up of ENI, Shell, Total, ExxonMobil, Kazmunaigas (all owning 16.8% stakes), CNPC (8.4%) and Inpex (7.6%).
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(News report from Issue No. 152, published on Sept. 18 2013)
SEPT. 13 2013 (The Conway Bulletin) — Azerbaijan’s government has been talking up efforts to boost its non-oil sector, but energy exports have still accounted for 95% of the value of all its exports so far this year, media quoted Azerbaijan’s Central Bank as saying. Analysts have said Azerbaijan needs to diversify its economy.
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(News report from Issue No. 152, published on Sept. 18 2013)
SEPT. 6 2013 (The Conway Bulletin) — A drop in savings held in Kazakh tenge in July showed people were losing confidence in Kazakhstan’s currency, the respected kapital.kz said. Central Bank data showed 350b tenge was withdrawn from bank accounts in July, reducing the proportion of savings held in tenge to about 61%, down from 66%.
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(News report from Issue No. 151, published on Sept. 11 2013)
SEPT. 9 2013 (The Conway Bulletin) — There was never much doubt but, eager to clarify after Armenia’s earlier announcement, local media quoted an unnamed source close to the Azerbaijani government as saying that Azerbaijan does not plan on joining Russia’s Customs Union. Armenia said it will join Russia, Belarus and Kazakhstan in the Customs Union.
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(News report from Issue No. 151, published on Sept. 11 2013)
SEPT. 6 2013 (The Conway Bulletin) — An increase in business outside Azerbaijan’s dominant energy-sector will boost overall GDP growth rates next year, Azerbaijani economy minister Shahin Mustafayev said. The economy will grow by 6.7% in 2014, Mr Mustafayev said, up from a predicted 5% this year and 2.2% in 2012.
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(News report from Issue No. 151, published on Sept. 11 2013)
SEPT. 3 2013 (The Conway Bulletin) — President Ilham Aliyev’s team have been highlighting Azerbaijan’s jump up the ranks of the World Economic Forum’s Global Competitiveness annual report.
It’s an election year, after all, in Azerbaijan and the WEF report is significant.
In an interview, Elnur Aslanov, head of the Mr Aliyev’s information centre, said Azerbaijan had moved to 39th position in the rankings from 48 last year because of the social and economic policies of the president.
It’s an impressive statistic. Azerbaijan has jumped from 55th position in 2011 and now lies above several EU states.
But it’s also worth looking at the detail.
The reason Azerbaijan ranks so highly in the WEF index is its high score for macroeconomic stability. Azerbaijan’s energy wealth gives it a healthy government debt ratio, a decent government budget balance and strong gross national savings. Azerbaijan also has relatively low inflation, another positive.
The report, though, also details serious shortcomings. These were mainly in the health and education sectors. Notably amongst these was the ranking for school management — 133rd in the world, out of 148 countries.
Significantly, too, of the business executives interviewed for the report nearly a quarter said corruption was still the biggest problem for doing business in Azerbaijan.
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(News report from Issue No. 151, published on Sept. 11 2013)