Shockwaves from a default by the biggest bank in Azerbaijan are spreading to its neighbor on the opposite shore of the Caspian Sea, Bloomberg reported. Already burned by the International Bank of Azerbaijan’s missed payment and its effort to wrest a 20 percent principal writedown in a proposed debt restructuring, investors are starting to wonder if Kazakhstan’s Kazkommertsbank is the next domino to fall. Its $250 million of subordinated bonds are trading below par only two weeks before maturity, a sign the bank’s ability to come through is in doubt. “Certainly some bondholders fear” that the Kazakh bank will follow in the footsteps of the Azeri lender, said Lutz Roehmeyer, who manages about $2.2 billion including IBA and Kazkommertsbank bonds at Landesbank Berlin Investment. “The ranking of the bonds is similar. I think the fear here is simply non-payment.” The crash in oil prices exposed vulnerabilities in the economies of Kazakhstan and Azerbaijan, the former Soviet Union’s second and third biggest crude producers, by shaking the confidence in banks and forcing currency devaluations. The handling of Kazkommertsbank could risk further backlash among investors already put off by a decade of defaults, debt restructurings and bailouts of Kazakh lenders. Read more.