Kyrgyzstan Steps Up Market Push With Bond Sale Plans and Gold-Backed Token

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(Bloomberg) — Kyrgyzstan is intent on boosting its presence in international markets, following up on a debut dollar bond with more debt offerings and advancing a gold-backed stablecoin.

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The government raised $700 million with its first eurobond sale in May, joining a growing list of Central Asian countries courting global investors. The administration may return to market, while wholly state-owned Eldik Bank OJSC is preparing for an inaugural sale in February and is in the final stages of signing contracts with banks for the deal, according to the Finance Ministry.

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“The corporate sector is also getting access to external markets after the successful state sale on the international capital markets,” Abdanbek Abdybapov, head of the Finance Ministry’s public debt and assets department, said in an interview from Bishkek. “We essentially opened the door for Kyrgyz corporations.”

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Central Asian nations, including Uzbekistan and Kazakhstan, are building momentum in global markets owing to the region’s improving credit stories, reform efforts and a push to broaden funding sources. Kyrgyzstan’s top goldminer Kyrgyzaltyn OJSC, smaller producer Kumtor Gold Company CJSC, Airports of Kyrgyzstan OJSC and another bank may also hold bond sales, Abdybapov said. 

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The debut eurobond, maturing in 2030 and rated four notches below investment grade by S&P Global Ratings, drew total demand of more than $2.1 billion, according to Abdybapov. Continental European investors were allocated 45% of the final offer, while those in the UK and Ireland took 30%. 

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The government plans further sovereign debt sales as Kyrgyzstan’s debt-to-gross domestic product ratio currently stands at 42.7% and is expected to decline to 23% by the end of 2030 due to rapid economic growth and as the country pays down older obligations, Abdybapov said. 

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“Economic growth was one of the main arguments to go to the international capital markets,” he said.

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The total approved eurobond mandate is $1.7 billion in a variety of currencies, although the timing of another sale will depend on market conditions, according to Abdybapov. Islamic finance instruments and green bonds are also being considered, but they are more complex to prepare, so a traditional eurobond will come first, he said.

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Kyrgyzstan used the proceeds of the debut bond to add the capital to its largest lender Eldik Bank, which is committed to financing energy projects and is now reviewing a pipeline of initiatives totaling more than $1.5 billion, Abdybapov said. 

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Digital Finance

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Aside from traditional instruments, Kyrgyzstan is making an ambitious push into digital finance. In November, the Finance Ministry–owned Issuer of Virtual Assets OJSC issued the USDKG gold-backed stablecoin, pegged 1:1 to the dollar, with an initial $50 million release. The issuance took place on the Tron and Ethereum blockchains. The Finance Ministry, which purchases gold alongside the national central bank, supplied the metal to back the new tokens.

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Kyrgyzstan is looking to capture a share of the rapidly growing stablecoin market, which is predicted to expand to as much as $4 trillion by 2030, Biybolot Mamytov, chief executive officer of Issuer of Virtual Assets, said during the same interview. With the business growing, the company may consider an initial public offering in the future, he said.

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“USDKG will become a useful and necessary tool for cross-border transactions,” Mamytov said. “It will support economic growth and attract capital and investment into Kyrgyzstan.” 

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