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. Last Updated: 07/27/2016

Kazakh Bank Gets Record Loan

ALMATY, Kazakhstan -- In what a Deutsche Bank official called a landmark agreement, Kazakhstan's largest bank, Kazcommertsbank, or KKB, on Thursday signed the largest syndicated loan in the country's 10-year history.

The term loan for $100 million was provided by 22 investors from around the world and was arranged by Deutsche Bank AG London, with the participation of Raiffeisen Zentralbank Osterreich, Bayerische Hypo-Und Vereinsbank AG and the ING Group.

"It's a landmark for Kazakhstan, both for the size of the loan and for the interest it aroused," said Axel-Peter Ohse, managing director of the global banking division of Deutsche Bank AG London.

"It's the biggest loan of this sort ever done here," he added. "Also, we had opened the loan at $75 million but it was oversubscribed to more than $100 million, so we decided to go for $100 million."

The loan, earmarked for trade financing, was provided for a year with a one-year rollover option at an interest rate of 2.75 percent over six-month LIBOR.

It was the lowest-cost commercial term loan and the largest syndication in Kazakhstan's history and the 10th syndicated loan raised by KKB in international markets.

The deal was signed four days after Kazakhstan celebrated the 10th anniversary of its independence from Russia, which ruled the country for two centuries.

Since 1991, Kazakhstan has pulled far ahead of other Central Asian nations and enjoys a financial system considered more transparent and efficient than that of either Turkey or Russia.

"I think part of the reason for the subscribers' enthusiasm is that Kazakhstan not only enjoys stability but also substantial growth at a time when a lot of emerging markets are either seeing their growth slow down or are in a recession," Ohse said, sipping champagne at a signing ceremony in Kazakhstan's economic capital Almaty.

"The advantage of a trade loan over a bond is that it builds a relationship between the bank and the outside world, which a bond doesn't do because the bond buyer can sell it immediately," he added.

KKB, the largest bank in the country, has assets equivalent to $1.09 billion, or 22 percent of the banking assets in this country of 15 million people. The bank posted a profit of $25 million in the first 11 months of the year, up 36 percent over the same period last year.

About 4 percent of Kazakhstan's 12 percent growth was due to exports of oil (currently around 800,000 barrels a day) and gas, with grain, steel and mineral exports making up the rest.

The financial sector is currently the fastest-growing in the economy, Central Bank governor Grigory Marchenko said.