(Bloomberg) -- The Kyrgyz Republic is testing investor appetite for a possible first-ever sale of dollar bonds.
The government is considering an issuance as soon as next year, pending an improvement in the central Asian country’s credit rating, Arzuubek Zhumayev, the Kyrgyz finance ministry’s head of state debt, told Bloomberg News by phone. In May, Moody’s Ratings affirmed Kyrgyzstan’s foreign issuer rating at B3, six levels below investment grade, with a change in the outlook to stable from negative.
Kyrgyzstan is expecting a ratings update early next year, and may decide to sell eurobonds “in the end of 2025 or the beginning of 2026,” Zhumayev said. The size of the issuance and the appointment of banks for the transaction will be decided next year, he said.
The economy of the landlocked nation of 7 million people relies on gold sales, as well as imports from neighboring China and exports to Russia. The latter have jumped since the West imposed sanctions on Russia over Vladimir Putin’s invasion of Ukraine.
Kyrgyzstan’s economy and fiscal metrics have been “significantly less affected by spillover effects of the Russian invasion of Ukraine than Moody’s earlier expected and despite the economy’s ongoing close links to the Russian economy,” the credit agency said in a May statement.
Earlier this year, the International Monetary Fund estimated that Kyrgyzstan’s outstanding external public debt will decline to 34.4% of gross domestic product in 2024 from 37.1% last year, according to a country report on its website. The IMF expects GDP to expand by 6.5% this year and 5% in 2025.
The Fund also advised the nation to “seek concessional external financing to lower borrowing costs.”
--With assistance from Kerim Karakaya and Torrey Clark.
(Updates with country data in fifth and sixth paragraphs.)
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