The EBRD supports capital markets in Kazakhstan

First overnight indexed swap transaction completed with Kazakh bank CenterCredit

• The EBRD is launching a new local currency interest rate swap derivative
• First swap indexed overnight in Kazakhstan with Bank CenterCredit
• Development of financial markets

The European Bank for Reconstruction and Development (EBRD) is further developing financial markets in Kazakhstan by introducing a new interest rate swap derivative in local currency – an Overnight Indexed Swap (OIS), in which the daily interest rate is exchanged for a fixed interest rate.

An initial one-year OIS transaction based on the Tenge Overnight Index Average (TONIA) has been completed with one of the country's largest lenders, Bank CenterCredit (BCC).

The OIS market will allow banks and investors to better manage their interest rate risk, making the financial system more stable and financial markets in Kazakhstan more attractive.

EBRD Treasurer Axel van Nederveen said: “The EBRD and Kazakhstan are making significant progress in developing financial markets. This transaction reaffirms TONIA’s role as an interest rate benchmark in the country, stimulating local currency lending and encouraging more TONIA-related swaps.”

The EBRD believes that the new derivative instrument fills an important gap in the capital markets and is interested in participating in the development of this instrument, not only as part of its involvement in local currency financial markets, but also as an active participant .

In accordance with market practices for indexing transactions to similar daily risk-free interest rates in other currencies, TONIA is compounded daily and the compounded interest rate is then calculated using the TONIA Compounded Index (TCI) at the end of each compounding period. The use of TCI simplifies calculations and reduces the risk of operational errors.

The Kazakhstan Stock Exchange (KASE) publishes the rate and index that it developed with the support of the Money Market Working Group, consisting of the National Bank of Kazakhstan, the EBRD and the country's leading financial institutions.

With over €10 billion invested in the country across 313 projects to date, Kazakhstan is the EBRD's largest and longest-running banking operation in Central Asia.