Kazakhstan Drops 20-Year Dollar Addiction With First Euro Bond

(Bloomberg) -- Kazakhstan is joining a raft of emerging-market borrowers rushing to sell bonds in euros as the gap widens between interest rates in Europe and the U.S.

After favoring dollar debt sales over the past two decades, Central Asia’s biggest energy producer is switching currencies as the European Central Bank vows not to tighten borrowing costs until at least next summer. The Finance Ministry began a week-long roadshow on Monday for a benchmark-sized 10-year note, according to a person familiar who asked not to be identified because the information is private.

“Euros make a lot of sense, the ECB will remain dovish in contrast to the Fed,” said Richard Segal, a senior analyst at Manulife Asset management in London.

Euro issuance from emerging markets has held firm in 2018 after falling 11 percent last year. Tunisia last week raised 500 million euros ($570 million) in five-year notes, while Egypt, Indonesia, Ivory Coast, Senegal, Chile and Mexico have also sold bonds in the currency.

Kazakhstan last sold dollar debt in July 2015, when it raised a record $4 billion in 10-year and 30-year notes. The nation is increasingly looking at expanding the geography of its borrowing, with plans also including yuan-denominated securities, former Finance Minister Bakhyt Sultanov said in an interview in Washington earlier this year.

Citigroup Inc., Societe Generale SA and BCC Invest are organizing investor meetings for the Kazakh sale in Paris, Frankfurt, Amsterdam and London.

To contact the reporter on this story: Lyubov Pronina in Brussels at lpronina@bloomberg.net

To contact the editors responsible for this story: Hannah Benjamin at hbenjamin1@bloomberg.net, Natasha Doff

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