The Kazakhstan Stock Market (KASE) Board of Directors recently approved the inclusion of commercial bonds on the exchange.
In accordance with the rules, starting Sept. 5, a new sector called Commercial Bonds will launch. The sector is meant for short-term bonds of companies that participate in KASE listings and whose security papers are included on the KASE list. Therefore, the listing requirements for borrowers have been significantly simplified, according to a KASE press release.
The potential issuer should meet three basic criteria: guarantee that a company has existed for at least three years; prove the absence of any defaults on previously issued bonds in the past three years and meet the status of a big business, which means having an annual income of at least 6.36 billion tenge (US$18,717,000) for the past three years.
The commercial bonds sector is different from the primary sector of debt securities because of the simplified listing requirements, reduced size of listing fees and the minimum package of documents required for initial registration. Thus, the listing process will be simple, fast and relatively inexpensive. The final decision on listings will be made by the Exchange Board. The issuance term for preliminary findings to issue securities will not exceed three working days. Apart from the fact that an issuer will incur lower costs for a listing organisation, the issuer also won’t need a financial advisor. This measure will allow companies to achieve significant savings. In addition, for the placement of securities on the stock market, an issuer will need to attract a broker and pay exchange fees for the placement of securities, which depends only on the volume of placement and are the same for all types of securities.
The opening of the sector was realised due to the introduction of new rules imposed by the National Bank, which entered into force in July this year. These rules regulate placement and circulation of bonds in Kazakhstan. Thus, the procedure for the registration of bond issues with an operation period up to one year was optimised and simplified. Under the new rules, such bonds may be registered by the National Bank without major corporate documents containing a detailed description of the company. The short-term corporate bonds will be registered on the basis of the statements of issuers and the issue period will last only three days.