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This Section is contributed by Kazkommerts Securities
October 1998
| Status | The growing importance of the private sector in the national economy is proved by the increasing foreign borrowing of private Kazak corporations. With an obvious lack of domestic capital its crucial that Kazak companies attract foreign capital. This type of external borrowing is made under guarantees arranged by the companies themselves and the Government does not accept any responsibility for such debt. The Government’s advantage is that this debt is not included in the statistics of the Government external debt, while the capital imported by private entities is serving the national economy. |
| Historic trends | The peak of external borrowing by private Kazak corporations was observed in 1997 when it almost doubled as compared to 1996 and the total amount of borrowing exceeded USD 2,058 million. The total amount of external borrowing by private companies (without Government guarantees) during 1994-97 reached USD 3.7 billion. The share of non- guaranteed external borrowing by the private sector continues to growing, from 16.6% of the gross external debt in 1996 to 27.3% in 1Q98. |
| Maturities | The vast majority of the private sector loans are short term loans (USD 1,340 million in 1997). The share of short term loans in the total amount due in 1997 was 85%. |
| Companies vs banks | Of the non-guaranteed external debt, the major borrowers are companies and second tier banks. The share of companies reached 86.5% of the gross non guaranteed debt as of the beginning of 1998 and the stock of the debt was USD 1,390.4 million. The share of second tier banks increased dramatically from 0.5% (of the total non-guaranteed external debt) in 1996 to 9.0% in 1997 and 13.3% in the 1Q98. The stock of the external debt of second tier banks reached USD 213.6 million as of 1Q98. |
external debt of the private sector,
by sources, usd million
Sources: National Bank of Kazakhstan, National Statistics Committee
| Breakdown of lenders | Foreign exporters make up a significant amount of credits to the private sector (38.6% of total non-governmental external debt), while the contributions from foreign founders/shareholders in Kazakhstan-registered companies and branches make up another 25.2%. The external debt of second tier banks consists of 34.3% in total private sector external borrowing. This type of external borrowing is short term in most cases. |
| © Kazkommerts Securities 1998.
Please cite source when quoting. This report has been prepared by Kazkommerts Securities and provided solely for information purposes to recipients only. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. This information does not constitute an offer to buy or sell securities. Kazkommerts Securities or its affiliated persons may be buying, selling or holding long or short positions, acting as investment bankers, be represented on the Board of the issuers in securities mentioned herein. This report is not intended for the use of private investors. Investment in Kazakhstan markets is an extremely risky activity and many persons, physical and legal, may be completely or partially restricted from dealing in the Kazakhstan securities markets. |
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