November 28, 2017
Halyk Finance successfully leads issuance and placement of $780 MM 10-year Eurobond by JSC “National Company ‘Kazakhstan Temir Zholy’” (“KTZ”) under KTZ’s complex liability management exercise
JSC Halyk Finance has successfully acted as a Joint Bookrunner in $780 MM 10-year Eurobond issuance and placement by JSC “National Company ‘Kazakhstan Temir Zholy’” (“KTZ” or the “Company”). This timely groundbreaking transaction has become an integral part of KTZ’s complex liability management project of enhancing the Company’s debt profile.
On October 27th, KTZ announced its invitation to each holder of its outstanding $700 MM 6.375% Notes due 2020 (the "Notes-2020") to tender any or all of such Notes-2020 for purchase by KTZ for cash and concurrently to consent to amend the terms and conditions of the Notes-2020 to provide for mandatory early redemption of these Notes by KTZ. Halyk Finance has fruitfully acted as a Dealer Manager and Consent Solicitation Agent on this transaction. After the Early Participation deadline had expired on November 9th, KTZ had firmly secured an overwhelming consent of the holders of the Notes-2020 representing a total nominal value of $587.2 MM or 84% of the Notes-2020 for the tender of, and amendment of the terms and conditions of, the Notes-2020. In addition, KTZ had secured the consent of the holders of the Notes-2020 representing a total nominal value of $21.2 MM or 3% of the Notes-2020 for amendment of the terms and conditions of the Notes-2020 without tendering the notes. Thus, a minimum quorum of 75% of the Notes-2020 for the holders to vote on the above agenda was achieved after only 2 weeks from the launch of KTZ’s tender offer.
On November 13th, KTZ had opened a global investor book for its new 10-year Eurobond with an expected nominal issue amount of $780 MM. Orders from investors in Kazakhstan were collected through the Kazakhstan Stock Exchange (the “KASE”) simultaneously with the international bookbuilding. The initial price guidance was set at a yield to maturity of “around 5%.” Upon the books’ closing, a very robust investor demand had allowed KTZ to set the final annual yield-to-maturity at just 4.80%. Kazakhstani investors’ orders submitted through the KASE were filled by the Company in full for a total nominal amount of $20.8 MM i.e. 3% of the total issue size.
The proceeds received by KTZ from placing the new Eurobond issue will be used by the Company for the early redemption of the Notes-2020 and payment of the tender offer consideration and the early consent fee to the holders who gave their early consent to amend the terms and conditions of the Notes-2020.
Mr. Arnat Abzhanov, Halyk Finance’s CEO, says “we are proud that KTZ has chosen Halyk Finance to act as its Joint Bookrunner, Dealer Manager and Consent Solicitation Agent in such an important complex transaction which required impeccable execution under an extremely tight timeframe. Halyk Finance’s successful participation in this innovative project significantly enhances our team’s substantial experience not only in arrangement of new issues but also in proactive management of our clients’ liabilities. The early redemption of a maturing bond and its timely replacement with a new longer-term issue has proved to be a very effective structure that will be of great interest to many other companies with maturing liabilities.”
Earlier in June 2017, Halyk Finance had successfully acted as a Joint Lead Manager for issuance and placement of KTZ’s (via KTZ Finance) debut 5-year RUR 15 billion bonds with dual listing on the KASE and the Moscow Exchange (the “MOEX”) which had become the 1st ever bond issue on the Russian market out of Kazakhstan and the 1st ever corporate bond issue on the Russian market by a foreign issuer out of the whole CIS region.
JSC Halyk Finance is the leading investment bank in Kazakhstan rendering a full range of investment banking services including consulting and underwriting, corporate finance (M&A advisory and corporate debt restructurings), sales and trading with market making on the KASE, investment portfolio management and research.
JSC Halyk Bank of Kazakhstan is one of Kazakhstan's leading financial services groups and a leading retail bank with the largest customer base and distribution network among banks in Kazakhstan. The Bank is developing as a universal financial group offering a broad range of services (banking, insurance, leasing, brokerage and asset management) to its retail, small and medium enterprises and corporate customers. Halyk Bank also operates in Russia, Georgia and Kyrgyzstan.
JSC Halyk Bank
tel. +7 727 2 590 891
Mr. Farkhad Okhonov
Consulting & Underwriting
JSC Halyk Finance
Тел.: +7 727 357 31 77