Wsj com East of the Oder February 8, 2002

Projects for two years), the interest rates were

similar. Yield on the shorter N.COM bonds was 27% and

26% for NCI Projects.
Asklepii, a pharmaceutical company that imports from

Europe and Russia, was the next to place a bond issue.

The company issued 270 million sum in bonds and the

issue was similar to that of N.COM in terms of

parameters and underwriters (one year at 27% annually).
The International Issue Syndicate portfolio by the start

of October had reached 20 bond issues. In addition to

the four named above, three more large companies placed

bonds in September and October, increasing the market by

six times.
A bond issue placed in mid-October by Almalyk

Metallurgical Combine worth 2 billion sum was the

biggest bond issue ever issued in Uzbekistan. The bonds

mature in one year and were placed at 29% annually.

Uzprivatbank was the main underwriter for the Almalyk

issue, joining the syndicate specifically for this bond

issue. The issue is currently being registered with the

securities market regulatory center, which oversees the

market.
Another big Uzbek company that placed a bond issue this

autumn was the Uzbek-American joint venture Coscom. The

company placed an issue worth 1 billion sum for two

years with a quarterly coupon of 29% annually. Analysts

said the bonds could become the leader on the secondary

market in terms of volume, however, NCI Projects is the

current undisputed leader on this segment.
The most recent corporate bond issue placed through the

International Issue Syndicate was one by Sovplastital

worth 1 billion sum. The syndicate will probably issue

one or two more corporate bonds by the end of the year.

A subsidiary of Planete Ltd plans an issue worth 500

million sum.

While International Issue Syndicate actively promotes

its services to organize corporate bond issues, a number

of rather interesting issues bypassed the syndicate. A

corporate bond issue by MDS-Service this summer that was

underwritten by one of the country's biggest banks who

is not a member of the syndicate, Uzzhilsberbank, is the

most appealing in terms of its potential on the

secondary market.

The bond issue was worth 350 million sum and face value

was 500,000 sum. The bonds were issued for two years at

26% annually and target corporate and private investors.

Advantages and shortfalls

The development of the corporate bond market reveals the

modest interest in the instrument both among enterprises

and investors. The high yield on corporate bonds is a

plus for investors. Government securities currently pay

18% - 19% annually and bank deposits pay up to 22%

annually. There are no other instruments for portfolio

investment in Uzbekistan.
On the other hand, paying 27% - 30% on borrowing along

with commission to the organizers and underwriters makes

this form of borrowing ineffective. Companies that

placed long issues have a difficult time. This is

because rapid devaluation in the next year could turn to

stabilization, which would lower nominal profitability

and complicate interest payments.
At the same time, companies can receive additional

working capital and money for investment projects

through bond issues. The amount of money borrowed under

bond issues is considerably higher than a bank could

provide, which is limited by the amount of its capital.

Corporate bond issues enable big companies to establish

a credit history and eventually operate on world capital

markets.

Another upside to corporate bond issues is that they

give institutional investors and instrument to diversify

portfolios and increase returns.

Copyright © 1999-2002 The Times of Central Asia

ADB Supports Microenterprises in Uzbekistan - ADB.orgHome | What's New |

ADB Supports Microenterprises in Uzbekistan

MANILA, PHILIPPINES (10 December 2002) - The Asian Development Bank (ADB)

approved a US$20 million loan to help provide microfinance services to

poor households, micro-enterprises and small businesses in Uzbekistan.

In addition, ADB will provide a technical assistance grant of US$400,000

to strengthen the capacity of the Central Bank of Uzbekistan for

prudential regulation and supervision of savings and credit unions (SCUs).

The loan will help create SCUs and strengthen the capacity of commercial

banks to provide microfinance services.

The assistance package supports the Government's efforts to promote the

development of micro and small enterprises (MSEs) as a means of generating
income and employment and easing the challenges of structural reforms. As

Uzbekistan moves towards a market-oriented economy, it must carry out

difficult reforms, including the restructuring and privatization of

state-owned enterprises. The development of MSEs will help to offset the

unemployment created by such reforms.

But Uzbekistan has a small and underdeveloped financial sector with

limited capacity to provide financial support to MSEs and to poor
households, particularly in isolated areas. In the past, there have been

no formal, legally incorporated microfinance institutions.

"An effective and well-funded financial system, which mobilizes savings

and provides the poor with financial support to set up MSEs is critical to

supporting the country's transition to a market economy and reducing

poverty," says Radhakrishna Narasimham, Senior Portfolio Management

Specialist in ADB's East and Central Asia Department.

The Small and Microfinance Development Project has three major elements:

Developing an effective regulatory and institutional framework for SCUs

Setting up an institutionally and financially sustainable network of 20

SCUs, supervised by the Central Bank

Providing a credit line to commercial banks for onlending to households,

microenterprises, and SCUs.

The total cost of the project, due to be completed in 2010, is US$50

million. Apart from ADB, it will be funded by contributions from the

Government, SCU members, participating commercial banks and their

borrowers.

The ADB loan will be made from its ordinary capital resources and will

have a 20-year term, including a grace period of five years. The interest

rate will be determined in accordance with ADB's LIBOR-based lending

facility.

More at adb.org/media

Contacts

Press Inquiries Only

Contact: Pamposh Dhar

Tel: + 632 632 5937

E-mail: [e-mail]

6 ADB Avenue, Mandaluyong

PO Box 789

0980 Metro Manila, Philippines

Tel: + 632 632 4444

Fax: [phone]

Telex: 63587 ADB PN/29066 ADB PH
© 2002 Asian Development Bank
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FT.com / World

EBRD's Uzbek meeting under review

By Stefan Wagstyl, East Europe Editor

Published: December 17 2002 22:19 | Last Updated: December 17 2002

22:19

The European Bank for Reconstruction and Development (EBRD) has

warned that "under exceptional circumstances" it could cancel its

annual meeting in Uzbekistan next year because of concern about

human rights abuses and lack of economic reform in the central Asian

state.
Jean Lemierre, EBRD president, said this week that the bank had

contingency plans to switch the meeting, normally attended by

hundreds of officials, business people and journalists, from

Tashkent to its home city of London. However, he emphasised that the

bank was not now planning a switch as there would have to be "a very

strong case for cancellation".

Any decision to pull out of Tashkent would be taken by the bank's 60

shareholder governments, including the US, the European Union states

and Japan. Such a move would cause deep controversy given

Uzbekistan's key role in the US-led coalition against terrorism and

in providing stability in central Asia.

Speaking after a recent visit to Tashkent, Mr Lemierre said:

"Cancellation would be a profound decision for the people of

Uzbekistan. It would be a major decision from a political point of

view. Uzbekistan is in a critical region after September 11."

The key moment could come in February when the board is due to

consider a new investment strategy for Uzbekistan. By then the UN is

expected to publish a report on torture prepared by Theo van Boven,

a UN envoy who visited Tashkent at the same time as Mr Lemierre.

Even before he left Tashkent, Mr van Boven said he had found

evidence of "systemic" torture.

Mr Lemierre said the bank would be monitoring Uzbekistan before,

during and after the annual meeting, due to be held in early May. He

had received "commitments" from Islam Karimov, Uzbekistan's

president, that human rights would be respected, including the

freedoms of local non-government organisations and local

journalists.

However, western NGOs are concerned that even if the Uzbek

authorities behave properly during the meeting, there could be

reprisals later, particularly if the meeting shows Uzbekistan in a

poor light.

Human Rights Watch (HRW), a US-based group, says the EBRD meeting

should only go ahead if Tashkent implements comprehensive reforms,

including introducing the judicial review of detention, the

decriminalisation of legitimate religious activity, and the release

of political prisoners.

Steve Crawshaw, an HRW spokesman, said: "We are not expecting

democracy in three months, but we want to see these changes."

HRW wants the EBRD to set down clear criteria by which it would

judge Tashkent's progress in the next few months.

© Copyright The Financial Times Limited 2002. "FT" and "Financial Times"

are trademarks of the Financial Times. Privacy policy | Terms & conditions

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FT.com / World

EBRD's Uzbek meeting under review

By Stefan Wagstyl, East Europe Editor

Published: December 17 2002 22:19 | Last Updated: December 17 2002

22:19

The European Bank for Reconstruction and Development (EBRD) has

warned that "under exceptional circumstances" it could cancel its

annual meeting in Uzbekistan next year because of concern about

human rights abuses and lack of economic reform in the central Asian

state.
Jean Lemierre, EBRD president, said this week that the bank had

contingency plans to switch the meeting, normally attended by

hundreds of officials, business people and journalists, from

Tashkent to its home city of London. However, he emphasised that the

bank was not now planning a switch as there would have to be "a very

strong case for cancellation".

Any decision to pull out of Tashkent would be taken by the bank's 60

shareholder governments, including the US, the European Union states

and Japan. Such a move would cause deep controversy given

Uzbekistan's key role in the US-led coalition against terrorism and

in providing stability in central Asia.

Speaking after a recent visit to Tashkent, Mr Lemierre said:

"Cancellation would be a profound decision for the people of

Uzbekistan. It would be a major decision from a political point of

view. Uzbekistan is in a critical region after September 11."

The key moment could come in February when the board is due to

consider a new investment strategy for Uzbekistan. By then the UN is

expected to publish a report on torture prepared by Theo van Boven,

a UN envoy who visited Tashkent at the same time as Mr Lemierre.

Even before he left Tashkent, Mr van Boven said he had found

evidence of "systemic" torture.

Mr Lemierre said the bank would be monitoring Uzbekistan before,

during and after the annual meeting, due to be held in early May. He

had received "commitments" from Islam Karimov, Uzbekistan's

president, that human rights would be respected, including the

freedoms of local non-government organisations and local

journalists.

However, western NGOs are concerned that even if the Uzbek

authorities behave properly during the meeting, there could be

reprisals later, particularly if the meeting shows Uzbekistan in a

poor light.

Human Rights Watch (HRW), a US-based group, says the EBRD meeting

should only go ahead if Tashkent implements comprehensive reforms,

including introducing the judicial review of detention, the

decriminalisation of legitimate religious activity, and the release

of political prisoners.

Steve Crawshaw, an HRW spokesman, said: "We are not expecting

democracy in three months, but we want to see these changes."

HRW wants the EBRD to set down clear criteria by which it would

judge Tashkent's progress in the next few months.