WITH only two deals closing in Kazakhstan so far this year, compared with nine in 1997, observers might assume that lenders have pulled back from the country.
But this is not the case. The two deals launched - Kazkommerts Finans's $20m one year term loan and Ispat Karmat's $250m project finance facility - were both extremely successful.
The Kazkommerts loan, carrying a margin of 375bp, which is 75bp more than it was paying last year, was increased to $35m as a result of oversubscription in retail.
According to participants, its success was down to two factors. "We like the country's economic situation - at least we prefer it to Russia's - and we like the borrower, which is one of Kazakhstan's most powerful banks and one which developed a good track record in 1997," says one.
The Ispat Karmat financing involved the largest ever non-recourse debt facility to be raised by a privatised enterprise. The $250m project finance debt is part of a $350m financing package arranged by the EBRD and IFC, which will finance the development of Ispat's integrated steel mill.
What impressed international financiers most was that ABN Amro, Bayerische Landesbank, Credit Suisse First Boston, ING Barings and Royal Bank of Canada joined the deal as co-arrangers.
Many bankers see the deal as the first step towards a fully fledged private project finance sector in Kazakhstan. "Kazakhstan could well have an operating independent power and industry sector before Russia does," says a spokesman at the EBRD.
"Commercial bank appetite has been strong here and co-financing is an excellent way for commercial banks to get their feet wet.
"With the experience from Ispat Karmet, they should be able to arrange financing without the EBRD or IFC's help in the near future. And that really would be progress."