EBRD acts as anchor investor in KICB’s first bond in Kyrgyz som

By Svitlana  Pyrkalo
@pyrkalo

The European Bank for Reconstruction and Development (EBRD) is supporting the local capital market in the Kyrgyz Republic by participating in a pilot corporate bond issue in som by the Kyrgyz Investment and Credit Bank (KICB).

The KICB bond is for the equivalent of US$ 2 million in local currency, for which the EBRD is acting as an anchor investor with an equivalent of US$ 500,000. It is the first bond issue by KICB. A successful placement of the bond will allow others to replicate this financial instrument, which allows banks to access local currency funds for on-lending to their business clients. Local currency finance allows companies – whose revenue is also in local currency – to avoid foreign exchange risks.

The investment was undertaken within the Early Transition Countries Local Currency Loan Programme, part of a bank-wide Local Currency and Capital Markets Development (LC2) Initiative. The programme is aimed at reducing dollarisation and developing local capital markets, including promoting corporate bond issuance

Noel Edison, a Director in the Financial Institutions group of the EBRD, said: “This bond is noteworthy not only because it is our hundredth project in the Kyrgyz Republic, but also because this issue represents a major step forward for the development of the local debt capital markets in the Kyrgyz Republic. The EBRD, in its capacity as an anchor investor, provided additional support through policy dialogue and technical cooperation. We hope that this deal will be the first of many corporate bonds issued in the Kyrgyz Republic, and that it will be replicated in other markets.”

The CEO of KICB, Kwang Young Choi, said: “As one of the largest and most dynamic banks in the Kyrgyz Republic, we are always looking to innovative products and services that help our clients. Together with the EBRD, one of our founding shareholders, we hope to strengthen the corporate bond market in our region.”

To date, the EBRD has invested a total of US$ 565 million in various sectors of the Kyrgyz economy, mobilising about US$ 720 million for those ventures from other sources of financing.