Newsroom: Article

Emerging Market De(bt)velopments

In early February, Gurbanguly Berdymukhammedov was elected as the new president of Turkmenistan after the sudden death of the eccentric and autocratic ruler Saparmurat Niyazov. There was immediate speculation in the market that the power change ought to positively affect the debt servicing behaviour of Turkmenistan, particularly regarding defaulted trade debts.
In recent months, the first reports of such improvements have appeared. Discussions on settlement of a number of defaulted trade debts have intensified and actual payments now take place on an ad hoc basis. It remains to be seen whether the improvements are structural and will not disappear after the initial enthusiasm surrounding the new president starts to fade.
Under the rule of Niyazov, Turkmenistan incurred a substantial amount of external sovereign debt. Economic figures on Turkmenistan are scarce, notoriously inaccurate and official statistics are treated as state secrets, but estimates on the government’s total external debt range from approximately $2.5bn to $3.5bn.
The Central Bank reportedly has no official reserves of any significance, whereas a foreign export reserve fund – exclusively controlled by the president – is reported to hold approximately $2bn (in foreign accounts, of course). With an estimated GDP in 2005 of $6.8bn and exports estimated at about $4bn, the debt servicing statistics of Turkmenistan indicate a heavy debt burden, but not necessarily at unsustainable levels.
There are substantial amounts of defaulted trade debts in the name of the government directly or in the name of many of the state companies. In the agricultural sector, there are quite a number of awards, claims and debts from foreign firms dating from 1996 onwards. Defaulted Turkmen trade debt is currently quoted at between 27% and 37% of principal, although trading still takes place only very occasionally. Defaulted Turkmen trade debt remains amongst the highest risk debts.

Holders of Turkmen debt, claims or awards are invited to contact us.

For brokerage requests or more information on specific debts, debt conversions and restructurings, please contact:
Omni Bridgeway Emerging Markets BV
Tobias Asserlaan 5, 2517 KC
The Hague, The Netherlands.
Tel: (+31) 70 3384343, Fax: (+31) 70 3523469
Raymond van Hulst on vanhulst@omnibridgeway.com
Heleen Rijkens on rijkens@omnibridgeway.com

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