Uzbekistan may tap global debt markets with a second dollar-denominated Eurobond this year after investors lapped up a debut sale in February.
“International investors need to be able to see a country’s credit history,” Mamarizo Nurmuratov, the nation’s central bank chief, said in an interview in St. Petersburg, Russia. “Our first one doesn’t give us a history just yet, it just created a benchmark.”
Policy makers in Central Asia’s most populous nation view the success of the first sale as confirmation that an economic overhaul is working. After emerging from more than two decades of isolation two years ago, Uzbekistan has drawn praise from the International Monetary Fund in the past year for liberalizing its currency market and reforming taxes.
Uzbekistan is rated three levels below investment grade at BB- at S&P Global Ratings and Fitch Ratings, the same as Brazil, North Macedonia and Georgia. The natural gas, gold and cotton exporter sold $1 billion of 10-year and five-year notes in February and would issue a similar amount in a second sale, Nurmuratov said. Commercial banks may also sell dollar bonds this year, he said.
“We don’t need money for state spending, but we need to be present on the international market,” Nurmuratov said. “For now, it makes sense to issue bonds in dollars, because our external trade is mainly in dollars.”
Investors bid more than $5.5 billion for Uzbekistan’s first Eurobond sale. The notes have returned 8.4% since their sale on Feb. 14, compared to 6.2% on average for emerging market dollar debt, according to Bloomberg Barclay’s indexes.
Uzbekistan has “successfully implemented” a first wave of reforms, and now needs to set priorities for a bigger structural overhaul, the IMF said in a March report. Economic growth in the nation of 30 million will reach 5.5% this year and 6% next, according to IMF estimates.
“We are giving a signal to foreign investors so that they bring direct investment as well as entering our sovereign debt market,” Nurmuratov said. “Debt placements give us an evaluation of progress in our reforms.”