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Exclusive: Uzbekistan appoints banks for international debt market debut

By Virginia Furness

LONDON (Reuters) - Uzbekistan is making final preparations for its first foray into international debt markets, naming four international banks to lead a dollar bond deal, sources involved in the plans have told Reuters.

JP Morgan has been appointed as lead adviser, and is joined by international debt houses Deutsche Bank and Citi as well state-owned Russian bank Gazprombank.

Having secured a BB- credit rating from Fitch this week, central Asia's most populous nation is readying a $500 million, 5-10 year bond for the first quarter of next year, said the sources, who spoke on condition of anonymity.

Uzbekistan has been gradually opening up what is largely still a Soviet 'command'-style economy since the death of hardline president Islam Karimov in 2016 and his replacement by Shavkat Mirziyoyev.

Issuing its first dollar-denominated bond will put Uzbekistan firmly on the map of international investors.

"They (the Uzbek government) met with investors in late November and the feedback was positive from most," said one of the sources. "It is an improving credit and investors are not viewing it as a Russian proxy."

A formal deal roadshow will take place early next year, the source said, with the deal set to be marketed to investors in Europe and the United States.

Uzbekistan's new BB- rating puts it in line with big emerging market debt issuers such Turkey, whose benchmark bonds now trade at a yield of around 7.5 percent.

It is also in between neighbours Kazakhstan with its 'investment grade' BBB-, and Tajikistan, with its B- rating, six notches below investment grade.

Tajikistan issued its first $500 million 10-year dollar bond in September last year, when emerging markets were on a charge, and paid 7.125 percent interest.

A volume of $500 million would make the new Uzbek bond eligible for JP Morgan’s widely-tracked EMBI global emerging debt benchmark, one of the sources said.


(Reporting by Virginia Furness; additional writing by Marc Jones; Editing by Kevin Liffey)