Tajikistan

Emerging market bonds remain set for a busy September as weak US data pushed dulled expectations of Federal Reserve rate hikes, outweighing escalating tensions between the US and Korea, and the Kenyan Supreme Court's decision to annul the result of the August 8 election.

With a GDP per capita of just $796, and foreign exchange reserves that cover just 9% of debt obligations, the Republic of Tajikistan cannot claim to be a frontier market, let alone an emerging market country. But that should be no obstacle as the Central Asian state approaches a bond market that has seen Belarus and Iraq raise debt with ease in recent months.

News of Otkritie’s bail-out has filled the buy-side with questions about the nature of the Centra Bank of Russia’s recovery plans sending Otkritie’s subordinated bonds yo-yoing between a cash price of 49 and low to mid 80s.

Tajikistan has named two lead banks for its first ever bond, the proceeds of which will be used to partially fund a hydropower plant project.

The Republic of Tajikistan is one step closer to selling its first dollar bond after gaining parliamentary approvals recently.

China Securities Regulatory Commission welcomes the prospect of A-share inclusion by MSCI, China’s State Council publishes a new negative list to make foreign investment easier in free trade zones, and the Asian Infrastructure Investment Bank (AIIB) makes its first equity investment.

In this round-up, Chinese premier Li discussed RMB foreign exchange volatility with IMF's Lagarde, the Asian Infrastructure Investment Bank formally launched, a new A-shares exchange traded fund launched in Hong Kong, while a survey found Hong Kong retail investors fear RMB volatility most for 2016, and Tajikistan activated its currency swap line with China. Plus, a recap of GlobalRMB's top stories this week.

Russia’s DeltaCredit Bank has opened books on a Rb5bn ($151m) five year covered bond and is aiming to close the deal by Friday, said bankers on the deal.

Société Générale’s Russian subsidiary, DeltaCredit Bank, is expected to place notes of its recently priced covered bond on Tuesday, its treasury told The Cover. It is expected to return with further deals next year as the Russian fledgling covered bond framework continues to restrict local issuers to their domestic market.

The Russian mortgage market has grown quickly, lifting prospects for fledgling covered bond issuance. However, despite being Ucits eligible and in line with the European Covered Bond Council’s Label definition, the country’s legal framework is not yet aligned with western Europe’s.

In the midst of the global financial crisis, officials at the National Bank of Azerbaijan are making time to review a draft covered bond law for the South Caucasian country, in a sign of their commitment to a project that is aimed at stimulating its mortgage market.

Reduced bank funding options, a growing reliance on retail deposits, and a frozen secondary real estate market. Sound familiar? No, it’s not the US, but Kazakhstan. But while covered bonds are coming to the fore in the States and being taken up in CIS countries such as the Ukraine, the market’s direction in Kazakhstan is less clear.