ASTANA – KazMunayGas’ (KMG) historic issuance of 3.5 billion yuan (US$520.3 million) in Dim Sum bonds could mark a new stage in Kazakhstan’s access to yuan-denominated financing, financial analyst Andrei Chebotaryov said. The transaction, which includes the first 10-year Dim Sum bonds issued by a company from Kazakhstan and Central Asia, attracted more than 25 billion yuan (US$3.7 billion) in orders.
KMG closed the order book on Aug. 26, with proceeds earmarked for its investment program. The bonds are scheduled to be placed on Sept. 2. The issue consists of two tranches. The five-year bonds, worth 1.5 billion yuan (US$223 million), carry a 2.3% annual coupon and a 2.45% yield.
The 10-year tranche totals 2 billion yuan (US$297.3 million), with a 2.8% coupon and a 2.98% yield. According to Chebotaryov, KMG became the first company in Kazakhstan and Central Asia to issue 10-year Dim Sum bonds, creating a long-term benchmark for yuan-denominated borrowing in the region.
“KMG became the first company in Kazakhstan and Central Asia to issue 10-year Dim Sum bonds. In the region, a 10-year benchmark was formed for the first time – in other words, a long-term yuan borrowing market has opened, which we did not have before,” Chebotaryov wrote on his Telegram channel on Aug.
28. Dim Sum bonds are yuan-denominated securities issued outside mainland China, typically in Hong Kong. For Kazakhstan, access to this market provides an alternative international financing channel. Moody’s assigned the bonds a Baa1 credit rating, matching KMG’s rating.
The most striking indicator was the scale of demand. Investor orders exceeded 25 billion yuan (US$3.7 billion) at the peak – more than seven times the announced issue size. According to KMG, this was the largest order book in the history of Dim Sum issues by issuers outside mainland China and Hong Kong.
Investors included banks, insurance companies, hedge funds and sovereign investment funds. A two-day roadshow in Hong Kong preceded the issue. Chebotaryov said the combination of borrowing costs, maturity and demand points to strong investor confidence. “Low funding costs, a long maturity and sevenfold oversubscription together say one thing: investors trust KazMunayGas and see the company as financially stable,” he wrote.