Samarkand Bonds

Samarkand Bonds

Supporting Uzbekistan’s growth and reform plans

Under President Shavkat Mirziyoyev’s leadership, Uzbekistan has introduced a reform agenda focussed on infrastructure investment, liberalising the economy and the currency regime. Over the next five years, the Uzbek government plans to implement investment projects worth $40 bn in energy, chemicals and pharmaceutics among other sectors. GDP growth in 2018-19 is projected to remain steady at 5% supported by strong commodity prices, trading-partner demand and infrastructure plans.

In February 2019, Uzbekistan issued the country’s inaugural international sovereign bond listing on London Stock Exchange's Main Market. Mr. Jamshid Kuchkarov, Deputy Prime Minister, Minister of Finance of the Republic of Uzbekistan, opened the London markets to celebrate raising $1bn in two $500m tranches of 5 and 10 year maturities. 

Building a Samarkand Bond Market

“Samarkand” bonds, the name by which Uzbek Soum denominated bonds are referred, will help expand the investor base in Uzbek Soum and raise the profile of the currency in the international debt markets. The Samarkand bond market will help Uzbek SOE’s and corporates access large scale foreign investment without foreign exchange risk for the issuers.

With reform momentum, fast pace demographic transition and a stable fiscal policy, Uzbekistan can successfully build an offshore local currency bond market, providing diversification in the investor base for Uzbek debt issuers.

London’s expertise in helping local currency bond markets

London provides access to the deepest pool of internationally oriented capital in the world, and accounts for 70% of the secondary market turnover in international bonds.

IFC, a member of the World Bank Group, issued its inaugural bond in Uzbek Soum, raising UZS 80 billion — ten million USD equivalent — to expand lending for micro, small and medium enterprises in Uzbekistan. The proceeds of the bond will be used to support Hamkorbank, allowing the country’s leading private bank to boost long-term local currency financing, which enables businesses to grow and avoid risks related to borrowing in foreign currency. This is the first-ever Uzbek Soum-denominated transaction issued in the international markets, listed on London Stock Exchange. Shortly after the was another Uzbek Soum-denominated bond issued which raised UZS 80 billion — ten million USD equivalent.

London Stock Exchange is home to many offshore local currency bonds. With 114 RMB (Dim Sum) bonds, 28 Indian Rupee (Masala) bonds and 21 Indonesian Rupiah (Komodo) bonds as of 3 January 2019, London Stock Exchange has extensive experience in promoting local currency bond markets in the international debt markets, eventually benefiting infrastructure investment via an alternative funding source.

London Stock Exchange stands ready to support first-time Samarkand bond issuers with Uzbekistan-dedicated resources, leveraging the unique experience and network it has built up at the heart of the financial community over the years.

International Securities Market – efficient, visible and liquid

International Securities Market (ISM) is an exchange-regulated market of London Stock Exchange aimed at professional investors and tailored to issuers of debt securities. It is has been designed to provide issuers with an efficient and streamlined admission process. 

Due to its flexibility, ISM’s innovative Rulebook allows international issuers to utilise local GAAP accounting standards when producing financial disclosure.

The Primary Regulation Team, with a depth of regulatory and fixed income experience utilises a customer-centric approach towards admission to trading to the ISM with a decision given within a competitive timeframe.

Issuers joining ISM benefit from London Stock Exchange’s distinguished reputation, heritage, and status.

Raising International Profile

Listing on London Stock Exchange provides issuers with enhanced visibility and additional marketing opportunities, which can be further boosted by Market Open ceremony, Investor Roundtables and Capital Market Days providing extensive media coverage in the world’s most international financial centres.