Uzbekistan is considering issuing government bonds with a floating coupon whose yield will be tied to UZONIA — the weighted average rate on interbank loans. For banks, such securities could become a source of stable long-term funding, while for investors they would be an instrument whose yield rises along with rates but also falls in step with them.
The Central Bank of Uzbekistan and International Monetary Fund experts discussed the development of the government securities market as part of the fund's technical mission studying this segment. The key topic was the potential issuance of bonds with a floating coupon tied to UZONIA. According to IMF specialists, the current market environment creates the preconditions for a gradual launch of such securities in pilot mode.
Why the market needs a floating rate
From the IMF's perspective, such bonds give banks a more stable source of long-term financing and reduce dependence on short-term borrowing. In addition, the regulator's rate decisions will be transmitted to the economy more quickly — that is, they will have a stronger influence on the cost of loans and the yield on deposits. For citizens, this means that deposit interest and loan payments may respond more promptly to the Central Bank's actions — both for better and for worse.
Separately, the participants discussed the use of the indicator in deposits, loans and interest rate swaps — transactions exchanging a fixed payment for a floating one. Such products help banks and companies more accurately assess and control risks when rates move up or down. At the end of the meeting, the parties confirmed their intention to continue cooperation and joint research, and also assessed the market's readiness, possible launch timelines and further steps.
Bonds, banks and IPOs: the contours of a new market
The pilot securities will complement a market where borrowers are already actively raising capital: in September, issues worth 358 billion soums and $90 million were registered in the country, with some of those in the national currency placed by microfinance organizations. Government securities linked to UZONIA could become a benchmark for such companies and simplify the calculation of borrowing costs.
At the same time, the regulator keeps credit institutions under close supervision: in September, the Central Bank fined eight banks for non-compliance with mandatory ratios, legal requirements and violations identified during inspections. For depositors and investors, this is rather a plus — floating-rate products will appear in a system where inspections and sanctions have become standard practice.
At the same time, the country is preparing for privatization: according to Marius Dan, head of Templeton Global Investments for Central Asia, the National Investment Fund (UzNIF) expects to hold the first two IPOs of portfolio companies in 2027, with Uzbektelecom among the candidates. A transparent rate benchmark will help investors compare the yields of debt securities and shares of state companies, so both reforms share one goal — to attract long-term capital into the economy.
Cryptalist analysis: Tying sovereign bonds to UZONIA is a step toward forming a full-fledged yield curve and developing interest rate risk hedging instruments, which is especially important for a market dominated by short-term funding. For institutional investors, such securities reduce the risk of asset-liability mismatch, but their attractiveness will depend on the liquidity of the indicator itself and the transparency of its calculation methodology. The success of the pilot will set the tone for the entire regional capital market for years to come.