No bail-out for BTA, Kazakhs warn

15/05/2009 | Sarah White

Samruk-Kazyna, the Kazakh sovereign wealth fund, confirmed yesterday that it will not bail out beleaguered BTA bank, which it controls, if it fails to reach agreement with creditors.

Samruk’s hardball stance piles the pressure on BTA’s lenders to come to an amenable conclusion to talks on restructuring $15 billion worth of debt.

“Samruk is willing to support BTA up to a point,” said Marcia Favale-Tarter, an independent advisor to the chairman of Samruk and the government on their financial restructuring strategy. But “there is no magic purse of money”.

Favele-Tarter told Emerging Markets that Samruk, which owns 75% of BTA, was supportive of the debt restructuring, but that they would not help the bank beyond that.

Samruk’s stance, which puts the onus on the bank’s 142 lenders to keep it afloat, was supported by BTA chairman Anvar Saidenov, who acknowledged that a full debt guarantee from the Kazakh government or Samruk “would have been very attractive outcome” for creditors.

But Saidenov argued that it was not the government’s responsibility to account for all of BTA’s debt, adding that “the bank was private when it took on its debt and borrowed so much.”

Samruk’s position could spell the liquidation of BTA if lenders are unwilling to play ball – a risk compounded by the complexity of negotiations.

The number of creditors and financial instruments involved is one of the main concerns for lenders involved in the debt talks, and their unwillingness to accept steep haircuts may also be a stumbling block. Grigori Marchenko, Governor of the National Bank of Kazakhstan, yesterday described the success of the restructuring plan as a “big if”.

But some analysts have been supportive of Samruk’s stance, as it could swing the outcome in BTA’s favour. “You cannot just expect Samruk to pour $12 billion of the country’s reserves into BTA,” said Luis Costa, emerging markets analyst at Commerzbank in London. “That would just be too good to be true for bondholders and lenders.”

However, Costa urged BTA’s management to present a restructuring plan quickly, saying that lenders were “hungry for information and it’s just taking far too long.”

A London based capital markets banker involved in the talks told Emerging Markets that Samruk’s position was a “threat from BTA to the creditors to act in BTA’s interest,” which could see it eventually reach a solution.

Saidenov acknowledged that the vast number of creditors involved in discussions would complicate talks, but said that a solution could be reached without the consent of the whole creditor group.

“There are many different instruments and a great number of creditors, but there is no need for the consent of 100% in restructurings, it can be 50% or 75% in certain cases,” he said.

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