While the redenomination specter haunts the more financially fragile members of the eurozone, Kazakhstan has actually gone through the exercise, sparking deep losses in a local RMBS, according to a note by Moody’s Investors Service.

Curiously enough, the decision to ban the indexation of Kazakh mortgages in US dollars came from the judicial quarter. The Supreme Court of Kazakhstan passed the judgment last December, and made it retroactive. Lenders were forced to swap dollar-indexed-loans into ones denominated in tenge, the local currency, at the exchange rate that was in effect at the time the mortgages were originated. What is more, some borrowers are potentially entitled to compensation for losses incurred by the indexation.

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