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December 10, 2012

Development Bank of Kazakhstan completes its ground-breaking liability management transaction

JSC Halyk Finance, as a Joint Lead Manager & Bookrunner for $1 bn 10-year benchmark Eurobond issue and as a Joint Dealer Manager for an intermediated exchange offer of JSC Development Bank of Kazakhstan (“DBK”) in December 2012, has successfully executed a ground-breaking liability management transaction coupled with the largest new bond issue ever by a Kazakhstan’s financial institution. An intermediated exchange offer for $500 MM of DBK’s $777 MM 5.5% Eurobond due December 2015 has become the 1st transaction EVER done globally for USD bonds, engraving a prominent liability management benchmark for ALL issuers out of Kazakhstan. This cornerstone exchange offer was fully supported by DBK’s investors, who tendered $742 MM (96% of the total previous Eurobond principal amount) by the early tender deadline of November 20th thereby exceeding the exchange offer size by a healthy 1.5x. By the tender expiration date of December 5th, the aggregate principal amount of tendered orders equaled $742.4 MM. To finance the offer, DBK has timely and effectively tapped the global bond market with its new 10-year benchmark Eurobond issue under its current $2 bn MTN Programme thoroughly backed by an impressively robust international and Kazakhstan’s order book of $3.43 bn from 170 accounts (including hefty $211 MM of Kazakhstan investors’ orders, $130 MM of which were filled), which expectedly led to an outstanding pricing result of YTM at just mere 4.326% with the coupon rate of 4.125% – the lowest YTM and the lowest coupon ever achieved by ANY Kazakhstan’s issuer.

The new issue’s size of $1 bn represents the LARGEST BOND ISSUE EVER by any Kazakhstan’s financial institution, which underpins Halyk Finance’s unparalleled and, many times, pioneering leadership in executing complex unprecedented corporate finance transactions for Kazakhstan’s issuers – not in the least evidenced by DBK’s debut MYR 240 MM 5-year Sukuk al-Murabahah issue in August 2012 which is the 1stEVER Sukuk issue out of the CIS region. Halyk Finance has fruitfully acted as a Joint Lead Manager & Bookrunner on this debut Islamic bond Sukuk placed successfully at par with a profit rate of just 5.50% (in MYR) in line with DBK’s secondary market curve.

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