Bond investors hunting for yield have a fresh location to search: Tajikistan.
The central Asian nation is preparing its debut benchmark offering, which could come to the market as early as next week, according to a person familiar with its thinking. It is the first emerging-market sovereign debt deal since the summer break, which will test investors’ risk appetite.
The small, mountainous country that borders Afghanistan and China is offering 10-year, dollar-denominated paper with no guarantee from any external organisation.
Tajikistan has a GDP per capita of just $804, according to the World Bank, and 43 per cent of its 8.3m population work in agriculture. It is immensely dependent on remittances from oil workers who have found jobs in Russia; 45 per cent of its GDP comes from the payments they send back, according to the IMF.
It was in talks with the IMF last year about a bailout of up to $500m as its economy suffered fallout from a recession in Russia and declining oil prices. President and former Soviet apparatchik Emomali Rahmon has ruled the country since 1992.
Tajikistan is not alone in seeking to tap the markets. Experienced deal bankers anticipate a substantial pipeline of issuance from emerging-market sovereigns in the coming weeks.
The markets have recently seen a flurry of dealmaking by emerging and frontier economies. That includes Iraq’s $1bn, five-year, 6.75 per cent bond earlier this month, which was six times oversubscribed, and Belarus’s $1.4bn, dual-maturity 5- and 10-year tranche bond two months ago.
Belarus priced its 10-year tranche at 7.625 per cent, and that will act as a guide to the pricing Tajikistan might expect.
Tajikistan is rated B3 by Moody’s and B- by S&P; both give it a stable outlook.
Citi and Raiffeisen Bank are acting as joint lead managers on the deal. The roadshow in the US and Europe will begin in the coming days.