In Uzbekistan, a large-scale programme document, Presidential Decree No. 254, has come into force, which by 2030 is intended to radically change the landscape of the national stock market. Through securities, they plan to attract $1 bn in investment, including through the issuance of corporate bonds worth 5 trillion soums. One of the key points is that resident companies have been granted the right to issue dollar-denominated bonds. Kursiv Research, together with experts, analysed how realistic these goals are and how the new measures will help the market.
From declarations to instruments
The new decree is not the first attempt to revive the stock market. Over the past five years, Uzbekistan has adopted several documents in this direction, but some points have not been implemented or are being postponed. For example, as of February 2026, individuals still cannot purchase government bonds. Amendments to the legislation allowing this came into force exactly four years ago, in February 2022. The Ministry of Economy and Finance (the issuer) has not yet given the process the green light.
However, not all programme points remain on paper. Foreign investors have been given access to government securities in the domestic market, and some of them have already tried this instrument (for example, Bank of Georgia), and the corporate bond market has become more active.
If five years ago the entry of a private company into the debt market was considered the event of the year, today it is a routine process. Businesses in Uzbekistan need financing, and the activation of the bond market confirms this.
The Chief Investment Officer of AFC Uzbekistan, Scott Osheroff, notes that the market had long been in a state of stagnation due to the lack of a regulatory framework.
«However, over the past 12 months there has been a huge transition in the corporate bond market,» Osheroff emphasises.
According to him, previously companies considered it a success to sell a tranche of $1–2 mln, whereas today the market easily «absorbs» amounts of $5 mln and above. Nevertheless, the expert warns that the absence of a developed secondary market still creates liquidity problems, but the current stage is precisely the «turning point» that the country has already passed in the consumer lending sector.
Currency bonds: a remedy for dollarisation or a new risk?
One of the most anticipated points of the new decree was the permission to issue bonds in foreign currency within the country. For an economy that has been fighting dollarisation for years, this looks like a departure from the rules, but experts see a pragmatic calculation in it.
An analyst at Freedom Broker, Boris Bondar, believes this is a logical step to attract and retain liquidity within the local market perimeter, which will convert existing dollar demand into a regulated exchange-traded instrument.
«In fact, we are talking about creating an alternative to foreign currency lending by banks. Corporate borrowers gain the opportunity to access investors directly, bypassing the bank balance sheet,» Bondar comments.
According to the analyst, the emergence of foreign currency issues within the country lays the foundation for forming a local yield curve in hard currency. In this case, companies will be able to borrow at a rate that more accurately reflects their own credit risk, rather than inflation and devaluation expectations for the soum.
Scott Osheroff adds to this idea, pointing to the huge volumes of foreign currency that the population keeps «under mattresses».
«This is a way to stimulate the market and encourage investors to reallocate capital from real estate or bank deposits into financing the private sector,» Osheroff says.
At the same time, he makes an important clarification for private investors: personally, he would prefer soum-denominated debt. In his opinion, yields on soum bonds above 20% offset devaluation risks and generate higher real returns than dollar instruments.
A permanent sandbox and the infrastructure question
The decree makes the regulatory sandbox regime — a special zone for testing financial innovations — permanent. This is critically important for attracting foreign participants.
Boris Bondar believes that the first instruments within the sandbox will be dollar-denominated bonds.
«However, the question of how quickly and efficiently issuances and placements of the instrument will take place remains unclear in the context of uncertainty regarding the launch of the relevant infrastructure,» he noted.
In turn, Scott Osheroff emphasises that stability is primary for foreign capital.
«An investor needs clarity. If the rules change every six months, business will not operate. The fact that the sandbox has become permanent gives foreigners confidence: the rules will not change. Foreign groups can now bring infrastructure to connect Uzbekistan’s market with the global one,» the expert explains.
The ability to legally trade securities of global giants (Apple, Tesla) or invest in ETF funds tracking the S&P 500 index is perhaps the most understandable point of the decree for the broader public. Experts expect this could trigger a multiple increase in public interest in the stock market.
Foreign shares as a gateway to the stock exchange
An analyst at Freedom Broker, Boris Bondar, calls this provision one of the most groundbreaking in the document. According to him, access to securities of foreign issuers will become a powerful driver for the development of a local investment culture.
«Global markets are efficient and well diversified. Managing capital in such an environment allows an investor to minimise the impact of uncertainty. Based on the example of neighbouring countries, we see that the introduction of such an opportunity significantly increases activity and engagement on the local exchange,» the expert notes.
Scott Osheroff agrees that brand recognition will benefit the market, acting as a kind of catalyst for retail investors in conditions of a limited supply of local assets. However, he urges caution, pointing to the risk of creating a one-sided portfolio.
«I believe that Uzbekistan plans to follow the example of Kazakhstan, where such shares are already represented. Everyone wants to own Netflix, Amazon, Google or Microsoft. But the problem is that these are not necessarily the companies one should own right now. The fact that a stock has risen over the past 10 years is not the best reason to buy it; many of these securities are overvalued,» Osheroff warns.
In the opinion of the AFC Uzbekistan director, concentration solely on the technology sector may lead to incorrect capital allocation. Osheroff emphasises that the market needs a broader range of foreign names, not only «hyped» giants.
«Unfortunately, since current legislation does not allow citizens of Uzbekistan to trade directly on US markets, there will not be full freedom of choice,» Osheroff noted.
Bonds above capital: risk of defaults or flexibility?
One of the debated points was the possibility for issuers, in certain cases, to issue unsecured bonds in amounts exceeding their own capital. For now, this rule exists only in the text of the decree — the corresponding mechanism still needs to be прописан in subordinate regulations.
An analyst at Freedom Broker, Boris Bondar, draws attention to the imperfection of current norms, according to which there is a limit on issuing unsecured securities if the issuer exceeds the size of its net assets. Moreover, this rule includes bonds already in circulation. Issuance above capital is currently possible only with collateral, whether real estate, an insurance policy or a bank guarantee.
However, the expert points to a serious gap in the current approach: other categories of debt obligations, such as direct loans and credits, are not taken into account at all when calculating this limit. According to Bondar, such an omission does not fully reflect the real picture of the issuer’s leverage (the ratio of debt to equity).
«Judgement regarding the leverage ratio itself is a two-sided phenomenon due to the differing norms for different sectors,» explains Boris Bondar.
In particular, he notes that for the financial sector a high level of this indicator is considered normal, as their activities are directly related to attracting funds to pass on to clients, and debt here is part of working capital. Therefore, comparing the leverage of such businesses with less capital-intensive sectors would be unreasonable.
The expert believes that if the current logic does not take into account all qualitative factors of the issuer’s condition, then the issue lies rather in the completeness of assessing the debt burden, rather than in the possibility of expanded bond issuance itself. Boris Bondar emphasises that disclosure requirements, ratings, financial covenants and regulatory supervision should play a key role in preventing risks.
For businesses themselves, the main advantage of abolishing old requirements will be a reduction in collateral costs. Bondar recalls that the need for collateral traditionally increased the effective cost of borrowing, and removing this factor may become decisive in the competition between bonds and bank loans.
At the same time, the expert уточняет: the draft of the new regulation states that foreign currency bonds should generally be secured by a guarantee or insurance. However, it provides for a clause allowing issuance without collateral by special decision of the authorised body. Final requirements will become clear after the publication of the final version of the document.
Scott Osheroff also does not see a major threat in expanding borrowing opportunities, provided that investors exercise caution.
«This is another mechanism for creating a fully functioning bond market. But investors must understand which companies they are investing in. In finance, the higher the interest rate, the higher the risk. Investors must possess a certain level of financial literacy,» he concludes.
Both experts agree on one point: the presence of a credit rating and transparent reporting will become the filter that allows reliable borrowers to be distinguished from potential bankrupts under the new freedom of action.
Expert opinion: a view on corporate governance
Director of Corporate Governance at Prosperity Capital Management, Denis Spirin
Corporate governance reform must continue
Decree No. 254 appears to be an important structural step for Uzbekistan’s capital market. It is valuable not only because it lays the foundation for introducing new capital market instruments, but also because it strengthens the infrastructure of securities ownership and investor protection. This is extremely important for a market at the development stage.
In terms of ownership infrastructure, further steps can be highlighted to закреплению the regime of foreign nominee holders. Thus, the decree предусматривает the introduction of the right for foreign nominee holders to vote and exercise other corporate rights on shares on behalf of their clients based on their instructions, without powers of attorney. This will allow foreign investors to invest in Uzbekistan through familiar market infrastructure and at the same time easily exercise all corporate rights.
In terms of investor protection, it is important to note that the National Agency for Perspective Projects (NAPP) receives additional powers to apply enforcement measures for violations in the sphere of corporate relations. This is precisely the instrument of accountability in corporate relations that the market currently lacks. However, the actual level of protection of minority investors will depend on how exactly this instrument is implemented in practice.
The provision allowing corporate disputes to be referred to arbitration is also noteworthy. On the one hand, it opens opportunities for bilateral corporate disputes to be resolved on a platform agreed upon by the parties themselves. For example, this concerns a dispute between two shareholders arising from a shareholder agreement concluded by them. On the other hand, there are corporate disputes that affect both the company itself and all its shareholders — for example, challenging a decision of the general meeting of shareholders. Such a dispute can hardly be referred to arbitration without the risk of violating the interests of some participant in such a complex corporate relationship. Therefore, it seems that the question of which specific corporate disputes can be referred to arbitration still requires careful regulation.
At the same time, it is important to note the need to continue reforming corporate governance both in terms of improving corporate legislation and in updating the corporate governance code and incorporating its norms and the «comply or explain» requirement into listing rules. Without these steps, the above provisions of the decree will have a very limited effect.
