Kyrgyzstan plans maiden Eurobond amid sanctions controversy

Kyrgyzstan plans to issue $1.7 billion in sovereign bonds for the first time in its history, according to Minister of Economy and Commerce Bakyt Sydykov.

The bonds are expected to be a significant step for Kyrgyzstan's entry into the international capital market, with an estimated maturity of 10 years.

Preparations for the issue include holding information events and road shows in Hong Kong.

Purposeful sanctions-busting?

Yet the timing of this planned issue comes as Kyrgyzstan draws increased scrutiny for allegedly helping Russia circumvent sanctions resulting from the war it instigated in Ukraine.

A notable instance involves Keremet Bank, in which the Kyrgyz Ministry of Finance sold a controlling stake in 2024 to a firm linked to a Russian oligarch - allegedly to help Russia manage payments for sanctions-evading trade.

Similarly, the Kyrgyz government established the Trading Company of the Kyrgyz Republic, in order to manage trade flows involving Kyrgyz firms whose goods do not pass through the country’s territory - which could be a mechanism to circumvent sanctions.

A booming industry

Moreover, trade flows from several European countries to Kyrgyzstan and a handful of other countries have surged exponentially since 2022, suggesting that Russia remains the ultimate destination of these sanctioned goods.

My former colleague Robin Brooks has covered trade irregularities in Kyrgyzstan and elsewhere extensively and repeatedly:

This “new normal” of huge Kyrgyz trade numbers squares well with widespread reports of Russia importing Western-produced cars, luxury goods, airplane parts, and various technologies via third countries.

It is easy for Kyrgyzstan to re-export goods to Russia as both countries are part of the Eurasian Economic Union, a single market and customs union that facilitates trade. The other members are Kazakhstan, Armenia, and Belarus.