Why is this important
Issuing a large volume of bonds in the national currency at a lower rate reduces the cost of borrowing for the state and eases pressure on the budget. Strong demand from foreign investors indicates growing confidence in macroeconomic policy and ongoing reforms. It also expands financing options without currency risks and strengthens the country’s position in global capital markets.
What happened
- Uzbekistan placed its largest-ever issuance of sovereign international bonds in the national currency, equivalent to $1 billion, at an annual interest rate of 12.25%.
- The placement took place amid strong interest from international investors and was accompanied by a global investor call involving 32 major participants from various regions.
- During the day, substantial demand was generated, after which the country successfully closed the deal on favorable terms.
Numbers and facts
- The placement volume amounted to 12.2 trillion soums (equivalent to $1 billion), the bond maturity is 3 years, and the final interest rate is 12.25% per annum.
- The rate on similar bonds was 16.625% in 2024 (3 trillion soums) and 15.5% in 2025 (6 trillion soums), while around 50 foreign investors submitted orders totaling 23.4 trillion soums.
- Demand exceeded supply by approximately four times, and the initial yield guidance was set at 12.5%.
- The final rate came in 14 basis points lower than yields in the domestic market.
- A total of 32 international investors from the United States, Europe, the United Kingdom, Asia, and the Middle East took part in the investor call.
- The potential volume of assets under management linked to inclusion in the GBI-EM index is estimated at $300 billion.
- The GBI-EM index includes bonds from 14 countries, including China, Turkey, Hungary, Brazil, Mexico, Malaysia, Poland, and South Africa.
- This is the largest local currency bond issuance in the CEEMEA region over the past 15 years.
Context
- For the state, this means the ability to borrow more cheaply in the national currency, reducing currency risks and easing pressure on the budget.
- For investors, it signals increased confidence in the economy and policy predictability, which may boost capital inflows.
- For local companies, it opens up opportunities to access international markets with similar instruments on more favorable terms.
