Regulation on the Issuance, Placement, Circulation and Redemption of State Securities of the Kyrgyz Republic

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Date of creation: 2024-04-16

Approved by the Resolution of the Government of the Kyrgyz Republic dated October 2, 2008 No. 556

REGULATION on the Issuance, Placement, Circulation and Redemption of State Securities of the Kyrgyz Republic

(As amended by Resolutions of the Government of the Kyrgyz Republic dated October 22, 2012 No. 738, October 27, 2015 No. 735, and the Cabinet of Ministers of the Kyrgyz Republic dated February 17, 2023 No. 85)

I. General Provisions

1. This Regulation on the Issuance, Placement, Circulation and Redemption of State Securities of the Kyrgyz Republic (hereinafter - the Regulation) establishes the procedure for the issuance, placement, circulation and redemption of state securities of the Kyrgyz Republic (hereinafter - SS) within the territory of the Kyrgyz Republic.

2. SS are debt obligations issued by the Ministry of Finance of the Kyrgyz Republic (hereinafter - Issuer) on behalf of the Cabinet of Ministers of the Kyrgyz Republic.

(As amended by the Resolution of the Cabinet of Ministers of the Kyrgyz Republic dated February 17, 2023 No. 85)

II. Terms and Definitions Used in this Regulation

3. For the purposes and understanding of this Regulation, the following terms and definitions are used:

Auction - a form of SS trading in which bids are satisfied on a competitive basis; State Treasury Bills (hereinafter STB) - short-term, interest-free (discount) SS; State Treasury Bonds (hereinafter STBonds) - long-term SS with interest income (coupon); Treasury Obligations (hereinafter - TO) - long-term securities of the Ministry of Finance of the Kyrgyz Republic, denominated in national currency, issued to settle obligations of state bodies; Depository - a legal entity of the Kyrgyz Republic carrying out accounting, storage of securities, registration of transfer and confirmation of ownership rights to SS, maintaining the register of security holders; Additional (off-auction) placement of SS - non-competitive sale of SS; Competitive sale - sale with specified price and quantity of SS purchased at the stated (bid) price; Coupon - interest income accrued on SS; Non-competitive sale - sale of SS at the weighted average price established at the auction; Settlement Operator - a legal entity of the Kyrgyz Republic carrying out monetary settlements for SS transactions; Trading Organizer - a legal entity of the Kyrgyz Republic carrying out operations for the placement, circulation and redemption of SS; Repurchase - operation by the Issuer to purchase SS in circulation; Resale - operation by the owner of SS in circulation to sell them; Issuance parameters - information on the issuance of SS: number, date, volume of issuance, redemption date and other information characterizing SS; Redemption of SS - crediting the nominal value to the accounts of holders of SS of the redeemed issuance; Redemption of coupon payments - crediting coupon payments to the accounts of SS holders; Authorized person of the Issuer - a person acting on behalf of the Issuer and possessing corresponding powers established by an official letter, power of attorney or notice; Issuer - the Ministry of Finance of the Kyrgyz Republic, acting on behalf of the Cabinet of Ministers of the Kyrgyz Republic.

(As amended by the Resolution of the Cabinet of Ministers of the Kyrgyz Republic dated February 17, 2023 No. 85)

III. General Conditions for Issuance, Placement, Circulation and Redemption of SS

4. The purpose of issuing SS is to finance the current deficit of the republican budget of the Kyrgyz Republic and refinance state debt due for payment, as well as to develop the market of state securities, economic development and financing of investment and infrastructure projects, redemption of budget obligations to legal and natural persons engaged in commercial and non-commercial activities.

(As amended by the Resolution of the Cabinet of Ministers of the Kyrgyz Republic dated February 17, 2023 No. 85)

5. The volume of each issuance of SS is determined by the Issuer, based on the maximum volume established for the corresponding year by the Law of the Kyrgyz Republic "On the Republican Budget of the Kyrgyz Republic".

6. SS may be represented by STB, STBonds and TO.

(As amended by the Resolution of the Cabinet of Ministers of the Kyrgyz Republic dated February 17, 2023 No. 85)

7. STB have a circulation period of 1 to 12 months, and their term in days must always be a multiple of 7, for example: starting from 28 days for 1-month STB, and 364 days for 12-month STB. The nominal value of one STB is equal to 100 soms. Issuance of STB is carried out in an unregistered (dematerialized) form.

8. STBonds have a circulation period of more than 1 year. The nominal value of one STBonds and the parameters of each issuance are determined by the Issuer at the time of issuance. STBonds are issued in registered and unregistered forms. The Issuer has the right to issue STBonds in the national currency of the Kyrgyz Republic and foreign currency.

(As amended by the Resolution of the Government of the Kyrgyz Republic dated October 27, 2015 No. 735)

8-1. TO are registered state securities. The parameters of TO are determined by the issuer and established in each issuance. TO are issued in paper form and may serve as collateral, as well as being a document granting the right within a specified period to unconditional satisfaction of a monetary claim presented by the TO owner to the issuer.

(As amended by the Resolution of the Cabinet of Ministers of the Kyrgyz Republic dated February 17, 2023 No. 85)

9. Relations between the Issuer, Trading Organizer, Settlement Operator and Depository are governed by corresponding agreements.

10. Rules for placement, circulation, settlement and accounting organization of SS are determined by legal documents of the Trading Organizer, agreed upon with the Issuer, Settlement Operator and Depository.

11. The Issuer's engagement of services from the Trading Organizer, Depository and Settlement Operator is carried out in accordance with the legislation of the Kyrgyz Republic.

12. SS holders may enter into civil law transactions with SS, except for restrictions established by the legislation of the Kyrgyz Republic.

13. The taxation procedure for SS transactions is determined in accordance with the legislation of the Kyrgyz Republic.

14. The Issuer ensures the publication of information on planned volumes of SS issuance for the next month in mass media and/or on the official website of the Issuer or the official website of the Trading Organizer no later than the 30th day of the current month.

(As amended by the Resolution of the Government of the Kyrgyz Republic dated October 22, 2012 No. 738)

IV. Issuance of SS

15. Issuance of SS is carried out at intervals determined by the Issuer. Issuance parameters are determined by the Issuer. Each issuance is documented with corresponding documents, whose composition and forms are defined by the Issuer's order, approved and signed by an authorized person of the Issuer.

16. In cases where the issuance date of SS is a non-working or holiday day in the Kyrgyz Republic, the issuance takes place on the next working day, with the redemption date of SS correspondingly shifted.

V. Placement of SS

17. Placement of SS, except for TO, in the primary market is carried out by the Trading Organizer through an auction.

(As amended by the Resolution of the Cabinet of Ministers of the Kyrgyz Republic dated February 17, 2023 No. 85)

18. In case of incomplete placement of the announced issuance of SS at a held auction, the Issuer has the right to re-offer the unplaced part of the announced volume at the next auction.

19. The auction is held at intervals determined by the Issuer. If the day of holding the auction falls on a non-working day, the auction is held on the next working day. In case of coincidence of this working day with the settlement day for bids accepted at the auction, the auction must be held before the non-working day begins.

20. Auction results are approved by the Issuer. The Issuer approves auction results within the following limits:

• maximum satisfaction of bids is limited to 25% excess over the volume of SS issuance;
• minimum satisfaction of bids is ensured within the following limits: in case if the sum of submitted bids is equal to or exceeds the volumes of announced issuance - minimum satisfaction of bids amounts to 25 percent of announced issuance; in case if the sum of submitted bids is less than announced issuance - minimum volume of satisfied bids is established within the limits of submitted bids.

(As amended by the Resolution of the Government of the Kyrgyz Republic dated October 27, 2015 No. 735)

21. The Issuer has the right to cancel the placement of SS (if no bids are satisfied):

• in case of participation in the auction by less than three participants;
• if the weighted average yield of accepted bids exceeds by 15% the weighted average yield established at the previous auction.

22. The Issuer may carry out additional (off-auction) placement of SS beyond the announced volume of issuance.

23. The procedure for carrying out additional (off-auction) placement of SS is determined by regulatory documents of the Trading Organizer, agreed upon with the Issuer, Settlement Operator and Depository.

24. The Issuer reserves the right to use other forms of SS placement.

VI. Circulation of SS

25. Circulation of SS begins on the day following the issuance date and ends on the day preceding their redemption date.

26. The Issuer may offer put and corresponding call options for SS in circulation at prices and volumes stated by the Issuer.

27. Rules for the Issuer's put option of SS are determined by legal documents of the Trading Organizer, agreed upon with the Issuer, Settlement Operator and Depository.

28. Conclusion of civil law transactions with SS in the secondary market is permitted only during their circulation on working days.

VII. Redemption of SS

29. Redemption of SS and coupon payment terms are determined by the Issuer at the time of issuance of SS.

30. If the redemption date of SS and/or coupon payments falls on a non-working day, redemption is carried out on the next working day, with no recalculation of interest amount.

31. Rules for redemption of SS and coupon payments are determined by regulatory documents of the Trading Organizer, agreed upon with the Issuer, Settlement Operator and Depository.

32. Issuance and redemption of TO are carried out in accordance with resolutions of the Cabinet of Ministers of the Kyrgyz Republic.

(As amended by the Resolution of the Cabinet of Ministers of the Kyrgyz Republic dated February 17, 2023 No. 85)

Contacts Public Reception: +996 (312) 61-04-86, +996 (312) 66-90-15, ext. +1257, +1256 Consumer Rights Protection Department: +996 (312) 66-90-15, ext. +1671, +1666 Report Corruption: +996 (312) 66-90-15, ext. +2120; +996 (312) 61-04-00 Official Exchange Rate Auto-Info: +996 (312) 61-07-11 Numismatic Museum: +996 (312) 66-90-15, ext. +1232; +996 (312) 61-24-14 E-mail: mail@nbkr.kg Media Relations: press@nbkr.kg 720010, Kyrgyz Republic, Bishkek city, Kiev street, 189