Navoi Mining and Metallurgy Combinat (NMMC), Uzbekistan’s state-owned gold mining giant, has made an impressive debut in the international capital markets with its first Eurobond issuance. The dual-tranche bond, totalling $1 billion, garnered overwhelming demand from global investors, further cementing NMMC's strong position in the market.

On October 9, 2024, NMMC successfully issued $500 million 6.7% bonds due in 2028 and $500 million 6.95% bonds due in 2031, with the notes trading up in the secondary market immediately after the pricing. The success of this deal marks a significant milestone for NMMC and is seen as a crucial step in the company’s broader financial strategy, including its future plans for an IPO.

Finasia Capital’s Role as Financial Advisor

As the financial advisor to NMMC’s shareholder (Ministry of Economy and Finance), Finasia Capital has been instrumental in guiding the marketing, bookbuilding and pricing processes, ensuring that the company is positioned very well in global markets to maximize investor participation and lowest possible pricing.

Under the leadership of Odilbek Isakov, CEO of Finasia Capital, our team played a pivotal role in executing a strategy that opened the door to a wide range of investors.

In an interview with Debtwire, Isakov explained the importance of allowing as many investors as possible to participate early on in the process, which contributed to the bond’s oversubscription and tight pricing.

“The strategy with initial guidance was to allow a large number of investors in at first,” said Isakov during the interview with GlobalCapital By setting initial price talk for the four-year tranche at 7.25% and the seven-year tranche at 7.5%, Finasia Capital helped NMMC secure a $5.3 billion order book at its peak, with oversubscription exceeding 5 times. This strong demand enabled the company to tighten pricing by a total of 55 basis points, resulting in a final coupon rate of 6.7% for the four-year tranche and 6.95% for the seven-year tranche.

“From an investors' perspective, they saw a high-quality company, and their priority was to get hold of the bonds, not to worry about the spread over the sovereign,” Isakov added, emphasizing how NMMC’s solid fundamentals and financial stability played a key role in investor confidence. The final pricing offered a 20-30 basis point spread over the sovereign, which was seen as a “win-win” for both the company and the investors.

This bond debut is a testament to NMMC’s strong credit fundamentals, efficient operations, and robust financial health. Investors have shown strong interest, particularly due to NMMC’s position as the world’s fourth-largest gold producer and its expected 30% increase in gold production by the end of 2024. With all-in sustaining costs of $866 per ounce, NMMC is among the lowest-cost global gold producers, further enhancing its investment appeal.

Strategic Execution of the Eurobond

Working closely with leading global financial institutions such as Citi, JP Morgan, Société Générale, Deutsche Bank, MUFG, ICBC, and Raiffeisen Bank, Finasia Capital helped NMMC achieve an impressive $4.2 billion final order book having achieved $5.5 billion at its peak. This strong investor interest allowed the company to tighten pricing twice, cutting 55 basis points from the initial price talk.

The bond issuance is part of NMMC’s broader strategy to optimize its financial structure and discover new financial markets with high-quality investors. The proceeds from the Eurobond will be used to repay part of the existing debt, while also providing liquidity for the company’s general capital expenditure. This refinancing effort is expected to significantly lower NMMC’s cost of capital and improve its debt profile.

A Stepping Stone to an IPO

NMMC’s successful Eurobond debut has not only brought immediate financial benefits but has also paved the way for the company’s next major step—its planned Initial Public Offering (IPO) in the international capital markets. The IPO, expected to take place as early as 2025, will further enhance NMMC’s transparency and open new avenues for growth.

“Our Eurobond issuance is a key stepping stone towards our IPO,” said Eugene Antonov, NMMC’s First Deputy General Director, in an interview with GlobalCapital. “This bond deal demonstrates our company’s commitment to growth and stability, and we are confident that our upcoming IPO will attract even greater interest from global investors.”

A Bright Future for NMMC

Looking ahead, NMMC aims to become a regular issuer in the capital markets, planning to return to the bond market every two years. As the company grows its operations and explores new opportunities in neighbouring countries, NMMC’s financial strategy will continue to play a critical role in sustaining its growth and competitiveness in the global gold market.

With NMMC’s strong standalone credit profile, rated BB- by both S&P Global and Fitch, and its strategic focus on matching dollar revenues with dollar-denominated debt, the company is well-positioned for long-term success. As Uzbekistan continues to attract global attention for its economic reforms and privatization initiatives, NMMC stands out as a key player driving the country's economic transformation.