TASHKENT

Uzbekistan has placed its debut 10-year state securities for 10 billion soums ($925,000) at the domestic securities market, republican currency exchange.

The weighted average coupon payment on these securities is 15 percent per annum, which is a benchmark for a 10-year period, the country’s Finance Ministry said.

The government has also placed 5-year securities totalling 174.5 billion soums ($16.1 million) with the weighted average interest coupon payment of 14.5 percent annually.

Uzbekistan’s government has been trying to diversify the public debt portfolio and reduce currency risks by increasing the volume of issuance of government securities and taking systematic measures to develop domestic financial markets.

“The issue of medium-term and long-term government securities serves as a benchmark for raising funds through the issuance of low-risk instruments in the national currency, creates the basis for diversifying financial instruments and attracting new participants in the financial market (non-residents, individuals, insurance companies),” the finance ministry said.

Last year, Uzbekistan has approved a roadmap to develop its capital market, which introduced a practice of holding auctions for placement of government securities for the long, 5-10 years terms, based on market demand.

The country has been cooperating with the United States Treasury to develop the government securities market, and the latter has been providing technical support to the Uzbek Treasury.

Also, Uzbekistan for the first time placed sovereign international bonds denominated in Uzbek soums in November 2020 in the amount of 2 trillion soums and in July 2021 in the amount of 2.5 trillion soums in order to reduce currency risks in the public debt portfolio.

The Central Asian country Uzbekistan first tapped the Eurobond market in February 2019 by selling $1 billion worth of five and ten-year bonds with a yield of 4.75 percent and 5.375 percent. The offering was split into two tranches of $500 million, due in 2024 and 2029. According to the Finance Ministry, demand for the bonds exceeded $8.5 billion. In November 2020, the ex-Soviet country placed another two tranches of three- and 10-year Eurobonds denominated in dollars and soums, to the amount of $750 million.

In July last year, Uzbekistan has 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 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.

Exposure to international markets followed more than two decades of economic isolation under Uzbekistan’s late president Islam Karimov. But President Shavkat Mirziyoyev, who came to power in 2016, has opened up the country for foreign investments and business.

One of Mirziyoyev’s key reforms was to liberalize its currency regime in September 2017. That opened the way for domestic businesses access to foreign exchange and paved the way for more reforms to open the economy and attract foreign investments.

After placing 10-year and 5-year state securities, the finance ministry said that it would continue to issue government bonds, taking into account the current situation in the financial markets and demand.