Development Bank of Kazakhstan JSC (hereinafter – DBK, a subsidiary of Baiterek Holding), as a development institute implementing the state investment policy, finances capital-intensive projects aimed at supporting non-resource sectors of the economy. Large businesses in Kazakhstan need cheap and long-term financing, and such funding can be provided by Development Bank of Kazakhstan. The national development institution has a wide range of relevant financial instruments in its arsenal - from providing medium- and long-term loans, including project greenfield financing, to export crediting of finished products. To finance infrastructure and innovation projects, DBK attracts financial resources both on the external and domestic market.
On July 28, this year, DBK once again raised funds through the issue and placement of bonds in the nominal amount of KZT 50 billion with a coupon rate of 11.8% per annum and a 5-year maturity. It is important to note that 9 institutional investors took part in the auction. The volume of demand exceeded the supply level by 1.4 times and amounted to KZT 71 billion. At that, 68% of the volume of attraction was purchased by commercial banks, 20.1% – by broker-dealer organizations and 11.9% – by other institutional investors.
DBK, being a development institute, has tools for attracting debt financing. In this case, debt securities in the form of bonds are one of the most common tools for attracting money. Bonds placed by DBK in the domestic and foreign capital markets are one of the most effective tools of long-term borrowings to replenish liquidity and increase in the volume of lending to the economy.
It is important to note that in February of this year DBK carried out the third issue of eurobonds denominated in KZT in the amount of KZT 62,5 billion. The circulation period of the securities is 5 years, with a coupon rate of 10.75% per annum. Eurobonds of the third issue were placed among European and Asian investors according to the Reg S Rule
Today, the Development Bank of Kazakhstan is one of the most creditworthy financial institutions in Kazakhstan from the point of view of foreign investors. This reputation has developed primarily based on the strategic role that DBK plays in the economy of Kazakhstan. This is reflected in the stable credit ratings of DBK, which are at the "investment" level, demonstrating the high quality of the Bank as a borrower. Not so long ago, the International Rating Agency S&P Global Ratings confirmed the long-term and short-term credit ratings of the issuer of DBK for liabilities in foreign and national currency at the level of "BB+/B", the forecast is "Stable" and on the national issuer's scale of "kzAA+". In its review, Moody's Investors Service also confirmed the long-term local and foreign currency ratings of "Baa3", highlighting the high level of support from the state and Baiterek National Managing Holding JSC.
Investor confidence is also based on the fact that DBK's financial statements are issued in accordance with international standards. An important factor here is that DBK was one of the first in Kazakhstan to implement the financial reporting system according to the IFRS-9 standard.
DBK also has a fairly competent Board of Directors and Independent Directors who have been building advanced standards of corporate governance and risk management systems for years. At the same time, we should also note the continuous support of the DBK from the state.
In this regard, in light of the general instability caused by the Covid19 pandemic, DBK once again emphasized its strong position, expressed in confidence in it among foreign and Kazakhstani investors and contributing to the continuation of the DBK's course towards sustainable development and strengthening of the country's national economy.
So today, for the half year the Bank direcred credit facilities in the amount of KZT 176,3 billion on financing of large and important projects for the economy of Kazakhstan, such as construction of a plant for MTBE production in Shymkent (Shymkent Chemical Company LLP), construction of a plant for power transformers production in Shymkent (Asia Trafo LLP), construction of a plant for ferrosilicium production in Karaganda (YDD Corporation LLC), provision of broadband access to rural settlements of the RK using FOCL technology (SilkNetCom LLP and Kazakhtelecom JSC), construction of Aktogai mining and processing plant in East Kazakhstan region (expansion to 50 million tons), construction of a second start-up complex for 50 MW wind power plant Astana EXPO-2017 (CAPEC Green Energy LLP), construction of the second stage of poultry farm for broiler production with capacity of 60 thousand tons per year in live weight in Akmola region (Makinsk poultry LLP), modernization of transport and logistics center in Nur-Sultan (Continental Logistic LLP), etc.
The Bank also actively supports domestic exporters, in January-June of this year, DBK provided pre-export financing to nine projects for KZT 40.3 billion. These are projects of such companies as Bayan-Sulu, Kazzinc, Kazphosphate, Shymkentmay, Molprodukt and others. In particular, due to this financial support for domestic exporters, more than 30 types of Kazakh products are exported to more than 15 countries of the near and far abroad.
