On April 25, Kazakhstan Temir Zholy plans to issue tenge denominated coupon bonds with volume of T50bn and 10 years tenor. Coupon rate is to be set based on trading results. KTZh will use the proceeds from the bond issuance to refinance its eurobonds.

 Our opinion

KTZh currently has 4 bond issuances with aggregate principal of T832bn (based on 340.23 USD/KZT and 352.42 CHF/KZT), or 68.7% of equity as of September 30, 2015:  USD KTZh 6.950% '42, CHF KTZh 2.590% '19, CHFKTZh 3.638% '22, USD KTZh 6.375% '20, USD KTZh 7,0%'16. We positively assess the company's incentive to decrease its FX leverage in light of the expected tenge volatility. The volume of the possible eurobonds buy-back might be equal to 6% of the total volume of FX denominated debt securities.