by Stephan Pouyat, Global Head of Capital Markets and Funds Services, Euroclear
Kazakhstan looks to open local bond market
Helping a country to find ways to make positive market change is always a good feeling. Especially when it’s something you’ve invested so much time in.
On Tuesday 23 January, Kazakhstan signed a memorandum of cooperation with Euroclear Bank to open its USD 28 billion local-currency debt market to foreign investors.
The opening could lower the country’s borrowing costs and diversify its investor base. We saw similar for Peru not too long ago.
This is great for Kazakhstan which is Central Asia’s biggest energy producer.
A more vibrant domestic capital market can pave the way to more resilience to global economic shifts.
Moreover, Western investors continue to hunt for that all elusive alpha and this move will really help them tap into this market’s potential more easily.
More instrument diversification and the chance for investors to have more control and visibility over their investments goes a long way to helping the investment decision process.
On the flip side, Finance Minister Bakhyt Sultanov commented in an interview with Bloomberg: “There’s a risk that with the entry of foreign investors, local bonds will become more volatile, but we’ll take steps to level out this volatility.”
Overall, this development echoes our efforts in Russia not so long ago. Here, we helped to liberalise the bond-market at a time when global stimulus had driven investors elsewhere.
Bloomberg notes that “The Russian deal, in 2013, drove down the government’s borrowing costs as foreign ownership surged.”
Euroclear is gaining good experience working with many markets across the world. Each is so different and that’s the challenge we enjoy.
For example, in Russia we had to amend Russian law and regulations to launch successfully. The beauty of the Kazakh approach is that they’re taking a blank sheet approach, immediately adopting international standards, so they don’t have to modify the Kazakh law.
It’s clear this is just the start of our relationship with Kazakhstan. Together we can create positive and sustainable change that should help the country to succeed in the future.
As Global Head of Capital Markets and Funds Services at Euroclear, Stephan Pouyat cares passionately about aligning the financial sector with moves to accelerate development among the world's emerging economies.