Competitive devaluation is a go, starting in the ‘Stans.
The official rate of the Kazakh Tenge has fallen to to 163.9 to the dollar on Tuesday, from 155.56 on Monday, shortly after the central bank announced that it would allow the national currency to devalue to around 185 per dollar. Read more
We would have thought that minority shareholders in corroded Kazakh miner ENRC might already have been softened to a pulp. But no…
The terms of the offer from the Kazakh oligarchs and the State Property and Privatisation Committee of the Ministry of Finance of the Republic of Kazakhstan were confirmed on Monday: Read more
Remember that fractious Kazakh bank restructuring?
RTRS-KAZAKH BANK BTA IN OFFICIAL DEFAULT ON $2 BLN 2018 BOND AS JAN.3 COUPON FUNDS NOT RECEIVED-CREDITORS CITE EUROCLEAR
January 17 marked the end of the grace period for BTA’s missed coupon payment. Creditors wanted this coupon paid before opening talks. Therefore — this Kazakh bank’s second, fractious, complicated debt restructuring bid just passed a point of no return… Read more
If you’re not following the BTA Bank restructuring saga… we offer the Kazakh lender’s latest effort to get shareholders on board:
ALMATY/LONDON, Jan 4 (Reuters) – BTA, Kazakhstan’s third-largest bank by assets, failed to make around $160 million in coupon payments due by Jan. 3, three sources told Reuters on Wednesday…
Yep, it’s Kazakh bank debt! Read more
Lightning never strikes twice…unless you are a Kazakh bank.
Or more specifically, unless you are BTA Bank. Remember them? The largest bank in Kazakhstan before the credit crisis, which defaulted on $12bn of debt in 2009? Read more
ENRC could have saved itself $600m and some potential blushes, at least for now.
Instead of asking independent shareholders to vote on a plan to buy the remaining 75 per cent of thermal coal producer Shubarkol from its oligarch founders, the company will instead request that the meeting be adjourned. Read more
Corporate governance is alive and well at ENRC.
Just weeks after the Kazakh miner said it was committed to a strong and independent board, it’s announced plans to buy a thermal coal producer from its founding oligarch trio. Read more
A third independent director is set to leave the board of FTSE 100 miner Eurasian Natural Resources Corporation, thrusting the London-listed Kazakh company further into turmoil. The FT reports that two people close to the situation say Mehmet Dalman, the former investment banker, is set to resign, leaving only one other independent director on the board. Two prominent City figures, Sir Richard Sykes and Ken Olisa, were ousted from ENRC on Wednesday. The three had been uneasy about corporate governance standards at the company, which has been the subject of speculation over the extent of influence held by three founding shareholders.
Wednesday’s AGM statement from ENRC, the Kazakh mining group and FTSE 100 constituent:
The Chairman, Dr Johannes Sittard, announced that the Group has initiated a comprehensive review of its corporate governance. This review will be conducted over the next three months, with the intention of establishing a Board structure that can best support the Group whilst complying with UK corporate governance best practice. At the conclusion of the corporate governance review any changes to the composition of the Board will be announced to the Market. Read more
Global commodities trader Glencore will close the books for its planned $11bn initial public offering on May 17, a day ahead of the original schedule, underscoring strong demand for the offer despite the recent downturn in commodity markets, reports Reuters. No reason was given for the early close in a term sheet seen by Thomson Reuters IFR on Friday. Sources previously told Reuters that order books were fully covered on the first day after strong interest from investors. Usually a decision to close books early is a sign of strong demand for the offer. On Thursday, Glencore CEO Ivan Glasenberg told a news conference the IPO had generated strong demand. The Telegraph reports that Kazakhstan’s key opposition figures have accused Glencore of illegally privatising assets worth up to $7.6bn amid fears the recent commodities sell off could hurt its valuation or force it to pull its $61bn flotation.
He’s the chairman of Kazakhmys, the London-listed Kazakhstani copper producer.
And he’s just sold an enormous chunk of stock. Read more
Royal Bank of Scotland is accelerating its withdrawal from Asia and the Middle East with the sale of a number of small businesses set to be agreed on in the next two weeks, the FT reports. The part UK state-owned bank on Wednesday announced the disposal of units in Pakistan and the United Arab Emirates and is understood to be on the verge of selling its operations in Kazakhstan.
Kazakhstan on Tuesday turned up the heat on a foreign consortium led by UK’s BG Group and Italy’s Eni that is developing one of the country’s biggest oil fields, threatening to deport expatriate workers for allegedly breaching immigration laws. The accusations mark an escalation in a feud at the Karachaganak field, in which the government is seeking a stake. It is the only foreign-led oil project where the state is not involved, the FT said.
BTA, Kazakhstan’s biggest bank, has agreed a deal with creditors who will write off $7.7bn in debt and interest owed as part of a wave of restructuring in the country’s banking system. BTA and a committee of international creditors signed a term sheet on Monday setting out key terms of its proposed financial restructuring. The creditors’ committee includes ABN Amro, Commerzbank, Standard Chartered, ING, KfW, and funds DE Shaw, and Fortis Investment Management. The plan will involve reducing BTA’s total debt, principal and interest from $12.3bn to $4.6bn. In exchange, lenders get a choice of different packages of instruments to swap their claims into.
Companies from Kazakhstan plan to move part of their fundraising away from London, according to the country’s central bank governor, because UK investors failed to stand by the central Asian state during the financial crisis. “Over-relying on London was a mistake because too many people ran away in the crisis and proved to be our fair-weather friends,” Grigory Marchenko said in an FT interview.
Just when Kazakh banks had fallen somewhat out of the limelight, AFP reminds us why investors should be wary of those particular institutions (beyond the usual suspects):
From an AFP report on Wednesday: Read more
Moody’s comprehensive re-examination of its ratings on the world’s banks continues apace. Here’s an overview of the actions taken since May 21:
- Moody’s reviews five Kazakh financial institutions for downgrade Read more
The default by Kazakhstan’s BTA Bank, which triggered the first-ever CDS event on an emerging market company, may well be a sign of things to come in the former Soviet Union, according to Oleksiy Soroka at BNP Paribas.
In a note released late on Thursday, Soroka made the following observations:
We believe that BTA’s default is an important credit event for the European emerging markets debt space. Read more
MOSCOW, April 28 (Reuters) – Kazakh bank BTA BTAS.KZ said on Tuesday its new state-appointed management had uncovered a “speculative derivatives transaction” that may have been overstated on its balance sheet.
Which should be particularly worrying for Morgan Stanley. Read more
After an expected bounce in the market for credit default swaps on the back of rally in equities, sentiment in the debt markets has deteriorated.
European credit derivative indices were trading wide of their closing levels on Tuesday. The Markit iTraxx Crossover index of mostly junk-rated borrowers’ CDS was quoted at 1092bp - at its wides of the day so far – having briefly traded inside the previous session’s closing level of 1072bp.
The iTraxx Europe index of mainly investment-grade borrowers’ CDS was quoted at 184.38bp, having traded as tight as 179.25bp this morning, after a close of 181bp Monday. Read more
Evidence of deteriorating economic conditions in central and eastern Europe fuelled a broad-based return to risk aversion in currency markets on Wednesday after Kazakhstan devalued its currency and Russia’s credit rating was downgraded. Kazakhstan’s central bank said it had widened the trading band for the tenge, allowing the currency to fall by 18% against the dollar to 150 tenge, in response to weaker oil prices and the impact of the global economic crisis. Kazakhstan’s devaluation triggered a wave of selling of emerging market currencies.
This CDS report was written by Markit’s Gavan Nolan
The European credit market has been following the path of its equity cousin this week, and today was no exception. The Markit iTraxx Europe index was 5bp tighter at 155.5bp, while the Markit iTraxx Crossover index was trading around 1037bp, about 28bp tighter on the day. Both indices were around 3% tighter compared to yesterday’s close, tracking the performance of the major European stock indices. Unlike yesterday, tightening credits in the main index outnumbered those that widened by more than seven to one. The rally was broad-based, with utilities and select retailers – notably Marks & Spencer – outperforming. Banks and car firms were the main laggards.The insurance sector received a boost after two of the major players reported solid results. UK insurer Aviva said that life and pensions new business sales rose by 11% in 2008, helped by its expansion into the US. Sales in Europe and Asia also were up significantly, more than offsetting a flat performance in the UK. Italian insurer Generali‘s was another to benefit from geographical diversification. Its better than expected results were fuelled by higher sales in central and eastern Europe, overshadowing lacklustre performances in its core western European markets. Read more
Spencer House Capital Management, which is run by Lord Rothschild and Richard Horlick, Schroders’ former head of investment, is launching a $200m (£99.7m) fund investing in Kazakhstan as well as companies in Kyrgyzstan, Uzbekistan, Turkmenistan, Tajikistan and Russia, the FT reports.
The closed-ended fund, which will be called Tau Capital, will list on Aim in May. It will be launched as a joint venture with Compass Asset Management, a Kazakh asset management group.
Chagala, a property play set up to take advantage of the demand for real estate in Kazakhstan, hasn’t been affected by the chill which has greeted a number of Russian listings of late.
The company, which builds hotels, apartments, offices and leisure facilities to cater to the businessmen brought to the west of the vast country by the energy industry, has priced its London listing of GDRs at $9.75, right at the top of the indicated $7.75 to $9.75 range. Read more