Kazakhstan's Capital Markets Ahead of the Pack

Abstract

This article argues that the passage of Kazakhstan's new Law “On Securitization,” expected in the second quarter of 2005, will not only ignite domestic (rather than foreign) jurisdiction asset-backed security (ABS) issuance and project finance, thus tapping pent-up, on-shore investment demand, but also redirect private investment flows into productive sectors of the economy heretofore largely ignored both domestic and foreign investors. The authors further argue that this Law, if approved by the Parliament in its present form, will lead to the development of a robust capital market, launch the Kazakh tenge-denominated ABS market, and be a basis for long-term sustainable economic growth. Furthermore, Kazakhstan's Law, in the authors' opinion, will be benchmark legislation for civil-code countries such as Russia, Ukraine, and much of Eastern Europe, which are currently struggling to put together the right legal “formula” for asset securitization and other forms of structured finance.