TASHKENT

Uzbekistan’s National Bank for Foreign Economic Affairs (NBU) has signed a memorandum with Russian investment banks on a 10 billion Russian rouble bond issue as the Central Asian country tries to reach the Russian bond market.

The agreement with Russia’s Sovkombank, Gazprombank, Rosselkhozbank, and Asia-Invest bank, which will act as the organisers of the issue of rouble bonds, was reached during an economic forum held in Uzbekistan. Consultation on obtaining a credit rating from the Russian agency ACRA is carried out by the Rating Consulting Center of JSC Gazprombank.

The issue of rouble bonds is a landmark event and a strategically important instrument for Uzbekistan’s capital market since the Russian bond market is the largest and most developed among the former Soviet countries with attractive interest rates.

“Given the high interest of Russian investors in Uzbekistan’s market, the attraction of resources in roubles by the National Bank by placing bonds on the Moscow Stock Exchange will help, first of all, to diversify sources of financing and minimize currency risks,” NBU said in a statement.

At the same time, the competitiveness of credit resources and their attractiveness and availability in the financial market will expand, including for financing contracts with Russian suppliers, the bank added.

By attracting financial resources, NBU plans to finance projects to expand and modernise the production capacities of industrial enterprises and business entities in various sectors of the economy, which will help create new jobs, increase the competitiveness of domestic producers and increase the country’s export potential.

“We are ready to offer the National Bank our experience and expertise in the field of organising bonded loans. I am sure that the debut of the Uzbek bank on the Russian market will become a benchmark and further evidence of the swift development of the Uzbek financial sector and its economy as a whole,” said Mikhail Avtukhov, Sovcombank’s deputy chairman of the board.

NBU placed its debut five-year Eurobonds worth $300 million in 2020.

In July, Uzbekistan placed two tranches of Eurobonds in the amount of $635 million at 3.9 percent and 2.5 trillion soums ($235 million) at 14 percent on the London Stock Exchange (LSE) to finance the construction of schools, hospitals and water supply systems in the Central Asian country.

Demand for the dollar tranche, with a maturity of 10 years,  exceeded $1 billion, and 2 trillion soums for the tranche of three-year bonds in national currency. Initial interest rates were in a range of 4.25-4.375 percent and 14.5 percent respectively.

Investment funds were the main buyers for both the dollar and soum Eurobonds. Dollar Eurobonds were mostly bought by U.S. and UK investors, and soum Eurobonds were purchased by UK and European investors.  The organisers of the issue were Citi, Gazprombank, J.P. Morgan and MUFG.