Uzbekistan: development of the debt market as an indicator of investor confidence

Corporate bonds are considered by experts as the future locomotive of the capital market of Uzbekistan. Despite the fact that the infrastructure of this segment is still being formed — REPO mechanisms are at an early stage, and the secondary market remains not very liquid - some banks are already betting on debt instruments as a key source of funding. One such example was the issue of AVO Bank in the amount of 500 billion soums.

According to experts, the formation of a mature corporate debt market requires a whole set of conditions. The first stage is the development of the government bond market, where basic mechanisms and standardized tools are tested. When investor confidence in infrastructure and transparency of operations is strengthened, the transition to the corporate segment is possible. Such elements as admission of non-residents, full use of repos and creation of a liquid secondary market are important here. It is these factors that ensure the advantages of bonds over loans, including the possibility of quick sale and reinvestment.

AVO Bank used bonds in a closed subscription format, targeting institutional investors associated with shareholders. The issue is divided into stages: to date, about half of the declared volume has been sold. The coupon rate is set at 22%, which the bank considers to be a fair level of return for the current market condition. Management notes that bonds form a more stable resource base compared to deposits, although this tool is still less accessible to retail investors due to low security in the event of an issuer's bankruptcy.

According to experts, full-fledged access to an open subscription will become possible only after the issuer demonstrates stable financial results for several years. International practice requires three years of stable operation and positive dynamics to obtain a high credit rating, which, in turn, will allow you to place bonds at a lower cost.

The development of the debt market in Uzbekistan is directly related to the formation of investor confidence and the creation of a predictable financial environment. Corporate bonds, along with government securities, can become the basis for attracting long-term capital needed to finance infrastructure and industrial projects. For the economy, this means new jobs, increased liquidity and strengthening the country's position in the regional and international financial markets.