Halyk Savings Bank Announces Results of Eurobond Placement
OREANDA-NEWS. January 31, 2011. Halyk Bank is the first amongst Kazakhstan's commercial banks to be so successful on the international capital market with its securities issue setting a new benchmark for Kazakhstan's entire banking industry. In 2011 Halyk Bank became the first bank across CIS that ventured such issue, reported the press-centre of KASE.
In January 2011, for the first time since the global financial crisis' onset, Halyk Bank discovered the international market capital for Kazakhstan's financial institutions having issued Eurobonds for USD500 m maturing in 10 years. The coupon interest on those Eurobonds was fixed at 7.25% APR, yield rate for investors - at 7.5% APR, with the cost of placement reaching 98.263%.
The term and coupon rate of this issue are ones of the best ever in the history of Kazakhstan's commercial banks. This issue's terms and conditions are comparable to Halyk Bank's Eurobonds issue at the beginning of 2007 with the market circumstances at that time being better than they are now. Citi, Deutsche Bank and Halyk Finance are acting as the Issue's Lead Managers and Organizers.
Halyk Bank's Eurobonds Issue hit the right note with investors. During the global road-show there were meetings with over 70 global and local institutional investors, and the Order Book exceeded USD2.3 bn. Numerous orders were received from first-class investors from US (51%), Great Britain (28%), Europe (14%) and Kazakhstan (7%). In the total amount of satisfied orders portfolio managers account for 83%, pension funds, central banks and insurance companies - 7%, banks - 6%, hedge funds - 4 %.
Good financial ratios for 9 months of 2010, strong liquidity position, stabilizing loan portfolio, change of Halyk Bank's Outlook to Stable, overall economic and financial situation getting better as well as the recent increase in Kazakhstan's sovereign rating have been the key factors of this IPO' success.
- We are very happy with the IPO and thank very much all of our investors, - says Umit Shayakhmetova, Halyk Bank Chairman, - This IPO's priority was to reach the 10-year maturity for the Eurobonds to extend average terms and diversify sources of finance for the Bank. Currently, Halyk's Eurobonds are being traded at yield rates higher than those of other issuers with a similar credit rating. In other words, international capital markets estimate Halyk Bank's creditworthiness significantly higher than it is supposed by the Bank's ratings.
Yield on these Eurobonds during the IPO was lower than the level supposed by the yield curve in terms of the Bank's existing Eurobonds. This fact is particularly remarkable, since the most of recent Eurobonds issues by other institutions were carried out with a yield higher than the existing yield curve, i.e. with a premium.
Halyk Bank's previous Eurobonds issue (USD500 m) effected in May 2008 with the maturity of 5.5 years was the last Eurobonds issue among Kazakhstan's commercial banks in the run-up to the global financial crisis.
Halyk Bank has retained loyal investors - many of the current investors have put their funds in the Bank before. Not only has the return of Halyk Bank on the international capital market increased the liquidity of the Bank's existing bonds, it has caught the eye of new investors. This placement has reinvigorated banks from Kazakhstan eager to expand onto capital markets abroad, proving that global investors are prepared to trust and put their money into leading commercial financial institutions in Kazakhstan, which enjoy good market positions and successfully cope with the crisis.
Currently, Halyk's Eurobonds portfolio includes USD800 m maturing in 3 years, USD700 m - 6 years and USD 500 m - 10 years, accordingly.
The final parameters of the Eurobonds issue have been published on the websites of London Stock Exchange and Kazakhstan Stock Exchange (www.kase.kz, www.londonstockexchange.com).
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