Kazakh Pension Changes Threaten Bond Sales, Managers, Visor Says

Kazakhstan’s move to unify almost $21 billion of retirement savings under a single state-run pension fund will choke off bond sales and decimate “a large number” of brokerages and asset managers, Visor Capital said.

“Most private pension funds will be closed or in a best case will lose most of their assets under management, and a large number of other professional participants in the market will shut down,” Almaty-based Visor Capital said in a statement e-mailed today.

Central Asia’s biggest energy producer plans to merge 10 private funds by July after President Nursultan Nazarbayev said at a Jan. 23 government meeting that a single pension fund should be formed to mobilize resources and expand access to credit under the central bank’s management.

Changes in the country’s pension system represent “a regression of the capital market in Kazakhstan,” according to Visor, the nation’s biggest stand-alone investment bank. Visor doesn’t own a pension fund.

“Many Kazakh companies will also lose access to reasonably priced funding, and will therefore not be able to invest as much as planned in new projects, which is clearly detrimental to Kazakhstan’s economy,” the bank said. “The monopolistic position of the single pension fund will create a situation where potential issuers will very much depend on a single investor in the market,” creating conditions that “will pave the way for inefficiency and potentially corruption.”

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