Comment by Darkhan Lukpanov, Tsesna Capital analyst: How to Cash in On Debts in Kazakhstan

friday 2017-04-07 16:00

Darkhan Lukpanov, Tsesna Capital’s analyst is sure that the banking sector suggests significant volatility within the next year and the successful investments in this sector suggest fast-track access to information and constant position monitoring.

"Therefore, the bank bonds are not of interest to individual investors against the deposits that offer a comparable yield with lower risks. News on a possible merger or takeover for the company's creditors is usually positive. "

"The talk on the acquisition of KKB by the Halyk Bank affected the price of Kazkom's bonds. For the holders of Halyk Bank bond this news was neither negative, given the prospects that the bank will have with the expected 40% share of the market. Expectations on the deal, in our view, have already been largely reflected in these issuers’ bond yields ", Lukpanov added.

In the case of Tsesnabank and BCC, the situation is somewhat different.

"This transaction is rather a standard M & A transaction, the purpose of which is to create an enlarged financial institution, that is why the yields on the bonds of these issuers did not change significantly in response to the news about Tsesna Bank's acquisition of BCC," the analyst explained.

The interlocutor specified that, in general, the instruments nominated in KZT produce higher yields, unlike Eurobonds. For example, bonds of the Eurasian Bank, Kaspi Bank, Tsesnabank, Bank CenterCredit and KKB offer a yield within 10-16% range.
But Lukpanov warned that while reviewing such investments, the investors should remember about the relatively low liquidity of the KZT bonds.

"In the local Eurobond market, among the issuers offering relatively high yields one may distinguish Fortebank with 8.9% in USD with repayment in 2024 or Kazkommertsbank at 6.75% with maturity in 2022 and 5.24% with maturity in 2018”, a representative of Tsesna Capital described the data .

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