New impetus for Kazakh debt restructuring

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21 October 2009

News emerges that true trade finance will get paid under Kazakhstan’s Alliance Bank’s debt restructuring. Dickon Harris asks whether this will create a fresh impetus for BTA Bank’s similar restructuring.

There has been a deathly silence emanating from Kazakhstan over the last few weeks. The restructuring process of $13.3 billion of debt for Kazakhstan’s biggest lender BTA Bank (BTA) has slowed to a crawl. The creditors’ steering committee and BTA’s new management are musing over two very different proposals issued in late September. Both make for grim reading and both have long-term implications for trade finance.

Short back and sides

BTA’s proposal issued in a memorandum of understanding (MoU) signed with the steering committee includes four options for its restructuring. These include an eye-watering 82.25% ‘haircut’ for an immediate cash option that 53% of the bankers would need to adopt.

Absolutely nowhere in the four options was there a mention that trade finance would be exempt. A shocking omission that has caused consternation in the trade finance world as it became clear that trade financiers...

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