EBRD Supports Capital Markets in Kazakhstan


The European Bank for Reconstruction and Development (EBRD) on December 6th said it is further developing the financial markets in Kazakhstan by introducing a new local currency interest rate swap derivative – an Overnight Indexed Swap (OIS) – in which the overnight rate is exchanged for a fixed interest rate.

An inaugural one-year OIS transaction, based on the Tenge Overnight Index Average (TONIA), was closed 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, thus making the financial system more stable and financial markets in Kazakhstan more attractive.

“The EBRD and Kazakhstan are making significant progress in the development of financial markets. This transaction reconfirms the role of TONIA as the interest rate benchmark in the country, stimulates local currency lending, and encourages more TONIA-linked swaps,” the EBRD’s Treasurer, Axel van Nederveen said.

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