(Bloomberg) -- Kazakhstan is returning to the dollar-bond market for the first time in almost a decade after a legal dispute that raised the threat of asset seizures was resolved earlier this year.
The government is offering long 10-year dollar-denominated bonds today, according to people with knowledge of the matter. Initial pricing for the benchmark-sized deal is about 120 basis points above the US Treasury curve, the people added, asking not to be identified because discussions aren’t public.
Pricing is expected later today. The government has hired JPMorgan Chase & Co., Citigroup Inc. and Societe Generale SA as joint book runners, as well as BCC Invest as a lead manager.
A long-running oil and gas dispute in Central Asia’s biggest energy producer saw billions of dollars of sovereign assets frozen temporarily in 2017. The government warned of the potential risk of further asset claims in a prospectus for its euro-denominated notes the following year.
The debt sale comes as President Kassym-Jomart Tokayev eyes rising taxes on banks to plug a budget shortfall.
Fitch Ratings predicted in May that the deficit would widen to 1.9% of gross domestic product in 2024 and to 2% the year after. The government has a $1.5 billion bond maturing in October and another for $2.5 billion due July next year.
Oil Spat
As much as $28 billion of sovereign assets were frozen in 2017 after the government refused to pay a $500 million arbitration award to the owners of Tristan Oil, led by Moldovan investors Anatolie and Gabriel Stati. Most of the assets were released, the following year according to the government.
In July of this year, Kazakhstan and the parties related to the Statis agreed to end the dispute, with the approval of Tristan Oil’s leading creditors, according to a Justice Ministry statement.
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