Samarkand bonds

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Building a Samarkand bond market

Uzbek soum-denominated bonds are known as Samarkand bonds, and are designed to help expand the investor base in Uzbek soum as well as raising the profile of the currency in the international debt markets. The growth of the Samarkand bond market will help Uzbek state-owned enterprises (SOEs) 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 is on the way to successfully building an offshore local currency bond market, providing diversification in the investor base for Uzbek debt issuers.

London’s expertise in Uzbek soum-denominated bonds

International Finance Corporation (IFC), a member of the World Bank Group, issued its inaugural bond in Uzbek soum in May 2018, raising UZS 80bn – the equivalent of $10m – to expand lending for micro, small and medium enterprises in Uzbekistan. The proceeds of the bond were used to support Hamkorbank, allowing the country’s leading private bank to boost long-term local currency financing, and enabling local businesses to grow while avoiding risks related to borrowing in foreign currency. Since then more than UZS 470bn have been raised on our markets.

London Stock Exchange is home to many offshore local currency bonds. With a number of renminbi (Dimsum) bonds, Indian rupee (Masala) bonds and Indonesian rupiah (Komodo) bonds, London Stock Exchange has extensive experience in promoting local currency bond markets in the international debt markets, eventually benefiting 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.

Key numbers

  • UZS 80bn
    raised by the IFC in its inaugural bond in Uzbek soum
  • UZS 470bn
    raised in our markets
  • $40 bn
    worth investment projects to be planned over the next five years

Landmark bond issue from IFC

London Stock Exchange welcomes the listing of the world’s first ever international Uzbek Soum-denominated bonds to its Main Market.

[Suneel Bakhshi, Chairman International Advisory Groups, London Stock Exchange Group] We are delighted to be celebrating here today.Uzbek Soum-denominated bonds issued in international markets by the IFC.[H.E. (Dr.) Alisher Shaykhov, Ambassador of Uzbekistan to the UK] Uzbekistan is currently undergoingsignificant reforms under the leadership of President Shavkat Mirziyoyev.We have decided to make the country more open and increase its presence in the capital market.[Shukhrat Vafaev, Deputy Chairman of the State Investment Committee and CEO, UFRD]This issuance by IFC provides additional liquidity, but more important,it opens an additional venue, an additional source of financingfor the public and private sectors.[Darko Hajdukovic, Head of Fixed Income, Funds & Analytics, UK Primary Markets, London Stock Exchange Group] The local currency bonds are a very important vehicle for issuers to accessinternational investors. They give international investorsopportunity to invest in a country without taking the exchange rate risk,which reduces the cost of issuing.[Georgina Baker, Vice President, Latin America and the Caribbean, and Europe and Central Asia]We see that this pioneering issuance has a positive flow-on effect, connecting the international investordemand for Soum bonds with a wide range of financing needs in Uzbekistan.As a world first, the successful issuance of IFC's inaugural Uzbek Soum Bondhighlights the London Stock Exchange's ability to finance global growth.[Jasur Khasanov, Chief Executive Officer Hamkorbank] Small business financeis HamkorBank's top priority. Expansion of micro lending operationsover the past yearhas strengthened the bank's leadership positionin Uzbekistan's microfinance sector. -With the masala bond, IFCdid the first issuance, and we're thrilled to seehow that market has really taken off. Now, many other entitiesare issuing external to India and raising fundingin international currencies, but on the London Stock Exchange.We're very pleased today that the Uzbeks have done the same.At the London Stock Exchange, we are very proud to hostover 13,000 bonds in 40 different currencies,and we've really provided not just the profile in the platformfor the issuers to raise capital, but also the necessary infrastructurefor them to do that in the most cost-effective manner.

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