Tajikistan takes another go at bond market

Heavily indebted Tajikistan has reportedly decided to take another run at the bond market by touting $500 million worth of notes.

RFE/RL’s Tajikistan service, Radio Ozodi, reported on April 23, citing an unnamed official in the Finance Ministry, that Merrill Lynch, the wealth management division of Bank of America, intends to buy a large chunk of the bonds.

A delegation from the investment bank traveled to Tajikistan in the first half of April to learn what progress had been made on the Roghun hydropower dam, which is the project to which all this money is being redirected.

Tajikistan is promising to start up the first generating units at Roghun by mid-November. The overall cost of completing the project is estimated at $3.9 billion.

Last September, the National Bank issued $500 million worth of eurobonds on the international market in an operation that has, by its own standards, been deemed something of a roaring success.

The international roadshow for the Tajik bonds was led by the deputy chairman of the National Bank, Jamoliddin Nuraliyev, who is also the son-in-law of President Emomali Rahmon. The 10-year notes were eventually sold at a yield of just over 7.1 percent. Crunching the numbers, this particular debt will leave Tajikistan having to pay off $850 million or so over the coming decade.

This new sale of bonds only adds to a fast-mounting debt pile. At the start of this year, Tajikistan’s external debt — including the bonds — came to $2.9 billion, equivalent to more than 40 percent of gross domestic product. And that is $600 million more than at the same time the year before.

The government’s own debt strategy specifically states that the debt-to-GDP ratio should not exceed 40 percent, although there is talk of raising this threshold by another 20 percentage points.

The government allocates around $150 million annually to servicing debts, so even a cursory glance should make it obvious where the crisis lies in waiting.