Uzbekistan streamlines issuance of soum-denominated bonds by international financial institutions: what it means for the capital market

The National Agency for Prospective Projects of the Republic of Uzbekistan (NAPP) has registered the Regulation on the issuance and state registration of bonds of international financial institutions (IFIs) denominated in the national currency. The Regulation implements Presidential Decree No. UP-26 of 21 February 2025 and opens the way for IFIs to raise funding in Uzbek soums (UZS) through placements on the Republican Stock Exchange “Toshkent” (RSE “Toshkent”), while giving local investors access to a high-quality fixed-income instrument. The procedure is simplified and faster, including the removal of prior approval for the full documentation package.

Context and legal basis

• Date and status: Registered on 11 August 2025 (registration No. 3660 with the Ministry of Justice of the Republic of Uzbekistan (MoJ RUz)).

• Normative framework: Developed pursuant to UP-26 “On additional measures to further develop housing and mortgage markets.”

• Objective: Deepen the local-currency debt market, increase liquidity, broaden the investor base, and strengthen institutional confidence.

What exactly has been simplified

The Regulation establishes a simplified state-registration process for IFI bonds in UZS, including:

1. elimination of mandatory prior approval of the issuer’s full document package;

2. registration based on an issuer questionnaire containing key information;

3. shortened, clearly defined review timelines;

4. the ability to submit materials in paper or electronically (including e-mail);

5. issuance in the form of exchange-traded bonds with subsequent listing on RSE “Toshkent”.

Why it matters

• For IFIs: Access to local liquidity and funding for projects in UZS, reducing asset-liability currency mismatch, lowering hedging needs, and delivering predictable coupon cash flows.

• For investors: Access to instruments from high-quality issuers with IFI-level credit strength, portfolio diversification, and a broader UZS yield curve.

• For the market: Deeper fixed-income segment on RSE “Toshkent”, formation of benchmark yields, and a stronger perception of Uzbekistan as a reliable local-currency issuance venue.

International precedents from the region

• European Bank for Reconstruction and Development (EBRD) — local-currency bond in Georgia (2016), GEL-denominated (GEL 107 million).

• International Finance Corporation (IFC) — local-currency bond in Kazakhstan (2018), KZT-denominated (KZT 8.6 billion).
  
  These cases illustrate sustainable demand for IFI local-currency paper and the practicality of such programs across the region.

Link to the housing and mortgage agenda

UP-26 targets, among other priorities, long-term funding for housing and mortgages. Simplifying UZS bond issuance for IFIs supports mobilizing long-dated local resources for housing, infrastructure, green energy, and SME finance.

How it will work in practice (typical sequence for an IFI)

1. Structuring: size, currency (UZS), tenor, coupon type/put options based on local demand.

2. Advisers: local legal counsel, arranger/underwriter, tax adviser.

3. Documentation: issuer questionnaire, exchange memorandum/prospectus, listing application.

4. Filing with NAPP: via the simplified route, including digital channels.

5. State registration with MoJ RUz and listing on RSE “Toshkent” — run in parallel.

6. Clearing/settlement: through the Central Securities Depository of the Republic of Uzbekistan (CSD RUz); UZS cash flows and coupon-payment set-up.

7. Placement: bookbuilding with banks, insurers, non-state pension funds (NPFs) and corporates.

8. Secondary market: liquidity support, ongoing disclosures, and scheduled put/call actions.

Potential effects and risks

Effects

• Lower dollarization via expansion of UZS instruments.

• Creation of benchmarks that can anchor corporate issuance.

• Influx of institutional and retail demand, higher disclosure standards.

Risks/challenges

• Need to fine-tune exchange and depository rules at RSE “Toshkent” and CSD RUz for IFI specifics.

• Early-stage demand concentration among a limited set of institutions.

• Tax treatment of coupons for certain investor categories and cross-jurisdictional legal alignment — will require methodical guidance from the Ministry of Finance of the Republic of Uzbekistan (MoF RUz) in coordination with NAPP.

What market participants should do now

For IFIs

• Assess UZS funding needs and define parameters for a pilot tranche.

• Mandate local legal counsel and an arranger experienced with RSE “Toshkent”.

• Prepare the issuer questionnaire and disclosure pack; align listing and the investor-marketing calendar.

For institutional investors

• Update investment policies/limits to admit IFI UZS bonds.

• Review coupon tax treatment and IFRS accounting.

• Compare expected returns with government bonds of the Republic of Uzbekistan and top corporates to set portfolio targets.

Market infrastructure, in brief

• RSE “Toshkent” — primary venue for listing and trading sovereign and corporate instruments.

• CSD RUz — safekeeping of rights, clearing, and corporate actions.

• NAPP* — regulator overseeing the securities market and state registration of issues (within its mandate) in coordination with MoJ RUz.

* – The National agency of perspective projects of the Republic of Uzbekistan – is a state institution responsible for regulation, licensing, and permitting procedures in the sphere of crypto-assets turnover, capital market, insurance, e-commerce, lotteries and gambling activities.

Source: Official communication by NAPP on registration of the Regulation (11 August 2025)