2. CORPORATE BONDS MARKET OF KAZAKHSTAN Building Domestic Debt Markets Conference Budapest, May 12-14, 2003 Azamat Joldasbekov President / Kazakhstan Stock Exchange (KASE)

3. The Most Successful Sample of Corporate Bonds Market in CIS Volume of corporate bonds markets in 2001, % of GDP Source: S.Lialin (Cbonds Co. / S-Petersburg, Russia)

4. Why? Just Follow the Rules The Market Is Where the Investors Are Stimulate the Market With the Tax Regime and Portfolio Investments Regulation (0% taxes for the main types of investors and the flexible limits of investments in corporate securities for institutional investors)

5. The National Investors The corporate bonds market of Kazakhstan is driven by the assets of the private accumulative pension funds (PAPF) and the commercial banks As for 01.01.03 the assets of the commercial banks are equal to 7,39 USD bln, of the private accumulative pension funds – 1,25 USD bln, in total – 8,64 USD bln (35,94% of GDP)

6. National Investors: Some Facts Pension reform in Kazakhstan was launched in 1998. The same year the first private accumulative pension funds have appeared There is State Accumulative Pension Fund (27,6% of total pension assets) but now it is not authorized to invest in corporate securities The impact of the individual investors and insurance companies is invisible

7. Foreign Portfolio Investors There are NO foreign portfolio investors in the bonds market of Kazakhstan: the yield is too low due to the excess of the domestic investors appetite over the domestic bonds supply

8. Yield of Kazakhstan Corporate Bonds (% p.a.)

9. Face Value of the Listed Bonds (USD mln)

10. Trade Turnover of the Listed Bonds (USD mln)

11. The Trade Volume is Lower Than the Total Face Value The reason is the same: the hungry national investors prefer to keep the bonds till maturity

12. Ratings of Kazakhstan Borrowers

13. What Do We Expect? The evolution growth of the national corporate bonds market (up to 10% of GDP and more) The growing interest of foreign portfolio managers to Kazakhstan corporate eurobonds The appearance of foreign bonds in Kazakhstan market (cheaper cost of borrowings)

14. Need to Know More? www.kase.kz