Uzbekistan priced Eurobonds for the second time, testing a recovery in global risk appetite with a sale from one of the few economies set to dodge recession this year.
The central Asian nation sold US$555 million in 10-year notes at 3.7% on Thursday, according to a person familiar with the deal who asked not to be named because they aren’t authorized to speak publicly. It also priced 2 trillion soum (US$193 million) of three-year notes in its local currency.
The bond sale is Uzbekistan’s second foray onto international debt markets, part of efforts to open up the former Soviet republic to global capital. It also comes as Joe Biden’s U.S. presidential win and progress with a coronavirus vaccine spur appetite for riskier assets, driving emerging-market yields to a record low.
The nation, which is ranked three steps below investment grade at Fitch Ratings and S&P Global Ratings, may benefit from analyst and International Monetary Fund predictions that it will be among the few nations to post economic growth this year.
A young population has helped Uzbekistan weather the coronavirus better than its neighbors and its economy has also benefited from a tilt toward agriculture, manufacturing and construction, according to Sofya Donets, the Chief Economist at Renaissance Capital in Moscow.
Uzbekistan sold its debut international bonds in February 2019, opening its economy to foreign investment from more than two decades of isolation. The yield on the note due 2029 has fallen to 3.69% from more than 5% at issuance.
That first placement performed well because it was rare and investors liked the country’s low debt levels, according to Lutz Roehmeyer, the chief investment officer at Capitulum Asset Management GmbH in Berlin, who plans to participate in the sale.
“We expect the second issue to perform only half as good, but that would still be an outperformer,” he said.
Uzbekistan has hired Citigroup Inc., Gazprombank JSC, JPMorgan Chase & Co., Societe Generale SA and VTB Capital as Joint Lead Managers and Bookrunners for the deal.