Published: March 1, 2019
Uzbekistan made its debut in the international bond markets with a US$1bn five and 10 year trade, with the borrower ratcheting in pricing far tighter than expected to regional comparable during the execution.
The borrower printed a US$500m 4.75% 2024 and US$500m 5.375% 2029 bond on February 13, with both bonds coming a par for a yield that matched the coupons.
Leads JP Morgan, Citi and Gazprombank started the sales process with the five year bond at 5.375% area and the 10 year debt at 6% area. The yield on the five year was then lowered to 5% to 5.125%, while the 10 year was refined to 5.625% to 5.75% range. This was then cut again on both trances to 4.75% to 4.875% range and 5.375% to 5.5% range before finance pricing.
“Armenia and Azerbaijan and some Latin American names were the comparables,” Denis Shulakov, first vice president at Gazprombank, told EMEA Finance. “People expected 150bp to 200bp over Azerbaijan, but the deal ended 50bp over.”
Shulakov added: “We tightened 0.625%, that’s significant tightening. You should expect that the book would shrink from this, but the deal was really well accepted.”
Nonetheless, there was some significant shrinkage in the book throughout the execution process. At its height, investors offered around US$9bn of orders for the debt, but as the price continued to tighten, demand fell to just short of US$4bn.