Kazakhstan has raised $1.5bn from a return to the dollar bond market after nearly a decade away.

Astana’s dollar-denominated eurobonds, the first since 2015, were issued as 10-year debt and sold at a coupon rate of 4.714%, the Kazakh finance ministry said in an October 4 statement. 

The ministry said the response to the issue reflected strong investor confidence in Kazakhstan. Orders amounted to nearly $6bn from over 100 investors across the US, UK, Europe, Asia and the Middle East. The deal was preceded by a one-day virtual roadshow, only made available to states with high investment ratings.

The bond issuance moved ahead after the resolution of a protracted legal dispute that froze $28bn of Kazakhstan’s sovereign assets in 2017. The conflict arose from a $500mn claim by the owners of Tristan Oil, Anatol and Gabriel Stati, against Kazakhstan. The dispute was finally settled in mid-July, concluding a 14-year legal battle.

In its statement, the finance ministry said: “Thanks to the timely offering, the Ministry of Finance was able to secure optimal parameters for both the volume and pricing of the issue. The aggregate order book demonstrated strong growth, reaching nearly $6 billion, which enabled us to establish the coupon rate and yield at 4.714%, with a premium [spread] to U.S. Treasuries of 88 basis points.”

The ministry noted that the spread was among the lowest for developing countries issuing 10-year sovereign bonds.

It is lower than the secondary market rates for several A-rated countries, including Saudi Arabia, Chile and Poland.

It added: “This eurobond issuance will strengthen the country’s financial stability and support its economic growth. In addition, the favorable placement conditions will create a benchmark for other issuers from Kazakhstan, both quasi-governmental and corporate, to enter international capital markets.”

A key factor contributing to the success of the bond issue was a recent sovereign rating upgrade on Kazakhstan to Baa1, with a "stable" outlook, released by Moody’s.

Each bond had a face value of $200,000, and 7,500 bonds were issued. The indicative coupon rate was set at 4.87%.

BCC Invest was lead manager for the transaction and international partners Citi, JPMorgan and Societe Generale served as joint lead managers and bookrunners for the transaction.

The eurobonds were listed on the London Stock Exchange and the Astana International Financial Centre Exchange.

Kazakhstan's 10-year dollar bond issued in 2015 had a coupon rate of 5.125%. Euro-denominated eurobonds issued by the country in 2018 took a coupon rate of 2.375%.