Central Bank of Uzbekistan Accepts Corporate Bonds in Repo Deals

The Central Bank of Uzbekistan has started accepting corporate bonds in its repo operations, expanding its list of eligible assets and giving commercial banks more ways to raise funds. The announcement came during a recent media dialogue with Central Bank officials.

Previously, only government-issued securities were accepted in repo deals. Now, the «collateral list» also includes corporate and mortgage refinancing bonds, according to Khumoyun Usmonaliev, Deputy Director of the Monetary Operations Department.

New rules introduce risk-based adjustments

To manage risk, the Central Bank applies what it calls a «correction factor» for each type of bond. This reduces the value accepted in repo deals based on the asset’s risk level. For example, mortgage bonds are accepted at 90% of their market value, while corporate bonds are accepted at 80%.

This means a bank holding mortgage bonds worth 10 bn UZS ($792,312) can only borrow up to 9 bn UZS ($713,080) from the Central Bank using those assets. For corporate bonds, the amount is limited to 8 bn UZS ($633,849).

Capital market growth opens the door to more instruments

Samigjon Inogamov, Director of the Central Bank’s Monetary Policy Department, noted that until now, only government bonds issued by the Ministry of Finance or the Central Bank itself were accepted.

«As our capital market develops, we will include more types of bonds,» he said.

The Central Bank has already carried out the first repo operations under the new rules. Notably, Hamkorbank successfully used part of the corporate bonds from the second issue of the Mortgage Refinancing Company to borrow from the Central Bank.

Kursiv also reports that The Asian Development Bank (ADB) has issued its first-ever bonds denominated in Uzbek soums.