TASHKENT

Uzbekistan’s state-owned carmaker UzAuto Motors issued $300 million worth Eurobonds of the RegS/144A format with a maturity of five years on the London Stock Exchange, the Finance Ministry said.

Orders totaled $1.4 billion and the final coupon rate was set at 4.85 percent, down from an initial 5.375 percent. Eurobonds were distributed to almost 130 investors from the UK (37 percent), the US (14 percent), Germany (8 percent) and a number of other European (35 percent) and Asian (6 percent) countries.

The majority of investors were asset managers and funds (67 percent), which were also actively distributed between banks (23 percent) and insurance and pension funds (10 percent).

The issue’s underwriting banks were leading international banks such as Citi (USA), MUFG (Japan), Natixis (France) and Raiffeisen Bank International (Austria).

The carmaker, the largest in Uzbekistan, produces Chevrolet cars in an alliance with General Motors and its annual production capacity is around 300,000 vehicles.

The company’s sales volume increased by 5 percent year-on-year in 2020 although revenue deteriorated by single-digits in U.S. dollar terms due to local currency devaluation.

Experts say that UzAuto Motors will use the Eurobond issue to cover investments related to producing new models and to refinance its bridge loan, while the local bank loan should be covered by repayment in installments.

S&P Global Ratings last week assigned its ‘B+’ rating to the senior unsecured notes issued by UzAuto Motors JSC (UAM; B+/Stable/B).

“We aligned the rating on the notes to the long-term issuer credit rating because the notes will not be structurally or contractually subordinated to any other debt instrument after the issuance,” the agency said in a statement.

S&P said that UAM would use the proceeds of the notes to finance its sizeable capital investments programme. This relates mainly to the Global Emerging Markets platform, which entails equipment renewal to retire old models and start production of General Motors models designed for emerging markets.

The company will also partially refinance its outstanding debt, it said.

“This transaction should extend the group’s maturity profile while providing additional liquidity to the group,” S&P said.

In January, S&P assigned ‘B+/B’ long- and short-term issuer credit ratings to UzAuto Motors.

In March, Fitch Ratings has assigned UzAuto Motors a long-term Issuer Default Rating (IDR) of ‘B+’ with “stable” outlook.

In 2018-2020, JSCB “Uzpromstroybank”, JSC “National Bank” and JSCB “Ipoteka Bank” as well as Uzbekistan’s government issued international bonds and attracted US$2.65 billion from foreign investors.

The Central Asian country is making efforts to improve its investment climate after more than two decades of economic isolation. The closed, autarkic system viewed most foreign investments as a threat. That ended when Islam Karimov, who had led Uzbekistan since before the Soviet breakup, died in 2016.

The current President, Shavkat Mirziyoyev, once a prime minister under Karimov, has made attracting foreign investors one of his top priorities in an increasingly ambitious plan to open Uzbekistan to the outside world.