Page 24 - bne_newspaper_May_04_2018

Eurasia
May 4, 2018 www.intellinews.com I Page 24
Uzbekistan hoping for $1bn international bond market debut but still undecided
bne IntelliNews
Uzbekistan is hoping for an international bond market debut worth $1bn but remains undecided on going ahead with a eurobond issuance with the move yet to be approved by Uzbek President Shavkat Mirziyoyev, the Nikkei Asian Review re- ported earlier this week, citing Uzbek Finance Minister Djamshid Kuchkarov.
It was reported in February that Uzbekistan plans to sell between $200mn-300mn of Eurobonds in 2018 to create a benchmark for Uzbek corporate borrowers. The country has named Raiffeisen Bank International AG as a potential issuer this year. The plan marks Uzbekistan out as the third Central Asian country to issue Eurobonds—the first to go ahead was oil-rich neighbour Kazakh- stan, while Tajikistan made a $500mn debut
last year. However, as the appetite for emerging markets has started cooling Uzbekistan may not necessarily find itself amid the most favourable conditions for issuing debt.
Uzbekistan last year began preparations to obtain a sovereign credit rating by signing a memoran- dum with Citigroup, noting that Citibank “will become [the country’s]” consultant. Raiffeisen Bank helped Tajikistan issue its first Eurobond, last September.
If followed through and completed, the Uzbek move would further improve foreign investment opportu- nities for Tashkent, with Uzbekistan recently having lifted strict currency controls. The controls long fed the Uzbek som black market, scaring away poten- tial foreign investors who could not, for instance, arrange to easily repatriate profits. Uzbekistan is hoping that a sovereign credit rating will allow the
country’s banks and enterprises to receive foreign loans at lower interest rates.
Kuchkarov has previously said that if the country’s sovereign rating gets a good review, the country plans to go ahead with its bond issuance plans. “We want Uzbek companies to also be in the in- ternational financial market,” Kuchkarov has said. “Our aim is to turn Uzbek companies into modern corporations.”
Uzbekistan’s GDP growth was recorded at 5.5% in 2017, down from 7.8% reported in 2016 – however, the decline might be explained by dishonest practices for reporting GDP growth under the
late president Islam Karimov, whom Mirziyoyev officially succeeded towards the end of 2016. The current Uzbek leader has himself admitted that growth figures in the previous decade were “fiction”.
Mirziyoyev is attempting to improve the country’s transparency and more accurately reflect its eco- nomic realities. Last October, the Uzbek authori- ties reported GDP growth at 5.3% for the first nine months of 2017 – it was the first time the Uzbek authorities had acknowledged growth below 7% within the past decade.
The relative drop in growth could be related to a decline in foreign direct investment following the political and economic uncertainty that followed Karimov's death. The number of greenfield FDI projects dropped to four in January-August 2017, compared to a total of 14 in 2016, but investment is expected to start growing following Mirziyoyev’s decision to lift the strict currency controls.