For the first time in Kazakhstan, the Damu Entrepreneurship Development Fund (a subsidiary of the Baiterek Holding) placed social bonds, registered by the Agency of the Republic of Kazakhstan for the Regulation and Development of the Financial Market in early September 2021.
The total value of the placed securities is 1 billion, maturity period – 5 years, bond yield – 11.9%, dividends are paid two times a year.
The first issue of social bonds adhering to the principles of sustainable development was carried out on the website of the Kazakhstan Stock Exchange (KASE). The bonds were purchased by local institutional investors. Halyk Finance acted as the broker and underwriter. The money earned by selling the social bonds will be used to finance small and medium-sized businesses from the sectors of the economy most affected by the COVID-19 pandemic. The financing will be performed through second-tier banks, microfinance organizations, or leasing companies. The issue fully complies with the principles of social bonds (SBP) of the International Capital Markets Association (ICMA), which is confirmed by the Expert RA.
– Bonds of the Damu Fund are the first securities on the Kazakhstan Stock Exchange that comply with social principles. To contribute to the sustainable development of small and medium-sized businesses, the Damu Fund plans to support the sectors of the economy most affected by the COVID-19 pandemic. This placement is an opportunity to attract investors, ensure financing in the capital market, and introduce a new financial instrument for the market based on the principles of sustainable development, – said Gaukhar Buribayeva, Chairman of the Board of the Damu Fund.
– The bonds were issued in order to promote ESG principles in the financing of the economy. We hope to observe growth in this segment, as an increasing number of issuers in the world are trying to meet all the challenges of the modern world, realizing that this will determine not only their contribution to global environmental issues but also the possibility of their own effective and sustainable development, – said Madina Abylkassymova, Chairperson of the Agency for Regulation and Development of the Financial Market.
The principles of sustainable development include three main components: environmental, social, and corporate financing (Environmental, Social and Governance – ESG).
The social bond market’s goal is to develop debt instruments for financing projects aimed at solving social problems. A positive social effect will be achieved by preserving existing jobs and creating new ones.
– KASE is actively promoting ESG standards in Kazakhstan. We have developed listing requirements, determined preferential terms for climate, social and other bonds. We have also put forward criteria for verifiers – companies that can independently evaluate ESG projects. Today KASE is a full-fledged platform for financing such projects. The issue of social bonds of the Damu Fund was verified by the Expert RA following the memorandum concluded with KASE. We hope that the first issue of social bonds will serve as a good example for other issuers to fill the stock market with quality instruments that meet international standards, – said Alina Aldambergen, Chairman of the Board of the Kazakhstan Stock Exchange (KASE).
Earlier, in August 2020, the Damu Fund issued the first climate bonds.