3.5 billion yuan at 2.8%: KazMunayGas enters the 10-year yuan bond market
Central Asia Column “Steppe Ahead”
3.5 billion yuan, equivalent to approximately 490 million U.S. dollars: Kazakhstan’s state-owned oil and gas company KazMunayGas (KMG) has issued its largest bond to date denominated in Chinese currency. Demand exceeded supply by more than seven times. This marks the first time a Central Asian company has sold yuan-denominated bonds with a ten-year maturity. The transaction was settled on September 2.
Order book of 25 billion yuan: Demand exceeds supply sevenfold
KMG split the issuance into two tranches. The five-year tranche of 1.5 billion yuan carries a coupon of 2.3%. The ten-year tranche of 2 billion yuan pays a coupon of 2.8%. The order book peaked at more than 25 billion yuan. According to KMG, it was the largest order book ever compiled by an issuer outside of mainland China and Hong Kong for dim sum bonds—the term used for yuan-denominated securities issued outside of mainland China.
The strong demand pushed down the terms. The regional news portal Times of Central Asia reports: KMG began marketing the bonds with coupons of around 2.95% and 3.45%. In the end, the company will pay 2.3% and 2.8%. Banks, insurers, hedge funds, and sovereign wealth funds from Asia subscribed to the bonds following a two-day roadshow in Hong Kong. The rating agency Moody’s assigned the bonds a Baa1 rating, which is KMG’s corporate rating. According to the Kazakh state broadcaster 24.kz, the lead managers included BOC International, CITIC, ICBC (Asia), and Citi, with Halyk Finance acting as the lead manager on the Kazakh side.
The increase is significant. In its debut in October 2025, KMG raised 1.25 billion yuan in a five-year bond at 2.95%. The new issuance is nearly three times as large, yet the interest rates are lower despite the longer maturity. The group cites historically low financing costs in the Eurobond market.
Yuan remains a marginal item: 69% of KMG’s debt is denominated in U.S. dollars
The yuan offensive has so far had only a marginal impact on the balance sheet structure. According to the Times of Central Asia, 69% of KMG’s liabilities were still denominated in U.S. dollars at the end of 2025. However, the group has created some flexibility: Its dim sum program allows for issuances of up to 15 billion yuan. After the first two issuances, just under a third of that amount has been utilized.
KMG is not alone in this. The sovereign wealth fund Samruk-Kazyna, the group’s parent company, placed 3 billion yuan in Panda bonds directly in China in April 2026. Kazakh state-owned enterprises are thus gradually establishing a second channel to the capital markets alongside the U.S. dollar. The paths to achieving this differ: Panda bonds are traded on the mainland Chinese market, while dim sum bonds are traded on the offshore market in Hong Kong. According to KMG, the proceeds from the new issuance will be channeled into the investment program. This includes the Silleno petrochemical complex, which is expected to produce 1.25 million metric tons of polyethylene annually.
Ten-Year Benchmark Opens the Yuan Market for the Region
The English-language Kazakh newspaper The Astana Times quotes financial analyst Andrei Chebotaryov: “KMG is the first company in Kazakhstan and Central Asia to issue ten-year Dim Sum bonds. This has created the region’s first ten-year benchmark: This opens up a long-term market for yuan financing that did not exist before.” Asian investors have bought into Kazakhstan’s credit risk ten years in advance, “and they bought willingly,” according to Chebotaryov. His conclusion: “Low financing costs, a long maturity, and a sevenfold oversubscription all point to one thing: Investors trust KazMunayGas and consider the company financially stable.” The issuance also serves as a model. KMG has set a trend, the analyst concludes. Every Kazakh issuer interested in yuan financing now has a reference point: a price, a maturity, and proven demand.
Economically, the move aligns with trade patterns. China is one of Kazakhstan’s most important trading partners, and a growing share of oil and commodity revenues comes from Chinese buyers. Yuan-denominated debt reduces dependence on the U.S. interest rate cycle and lowers financing costs: The coupons are well below those of comparable dollar-denominated bonds. At the same time, the market for offshore yuan-denominated securities is growing because Beijing is pushing ahead with the internationalization of its currency and ample liquidity is available to investors in Hong Kong.
The currency risk remains an open question. KMG sells most of its oil in U.S. dollars but will service more debt in yuan in the future. If the Chinese currency appreciates, debt service costs will rise. In addition, Kazakhstan’s most important corporation is tying itself more closely to the Chinese capital market, whose rules are set by Beijing. The next test will come soon: other Kazakh state-owned enterprises are likely to test the new interest rate window.
Source: The Astana Times, Times of Central Asia (EN) 24.kz, KazMunayGas (RU)