Baku, Azerbaijan, July 14
By Elena Kosolapova - Trend:
The International Rating Agency Fitch Ratings has assigned Kazakhstan's Joint Stock Company National Management Holding Baiterek a Long-term foreign currency Issuer Default Rating (IDR) of 'BBB+', a Long-term local currency IDR of 'A-', a National Long-Term rating of 'AAA(kaz)' and a Short-term foreign currency IDR of 'F2', the rating agency reported on July 14.
The Outlooks on the Long-Term ratings are Stable.
Fitch has also assigned a Long-term local currency rating of 'A-' and a National Long-term Rating of 'AAA(kaz)' to Baiterek's 100 billion tenge (equivalent to $0.5 billion) senior unsecured domestic bond purchased by the National Fund of the Republic of Kazakhstan.
"Baiterek's ratings are equalised with those of Kazakhstan (BBB+/A-/Stable) to reflect the high probability of support, in case of need, from the State. This is based on Baiterek's 100-percent state ownership and its special status as a national management holding company, specifically as the development arm of the government," Fitch said.
The ratings also reflect significant state-originated funding for Baiterek and associated risks of direct lending. Fitch uses its public-sector entities criteria and applies a top-down approach in its analysis of Baiterek.
Baiterek is one of three national management holding companies and performs a key function of the government in developing the national economy. It was established in May 2013 by a decree of the President of Kazakhstan. The other two management holding companies are Samruk-Kazyna (BBB+/A-/Stable) and KazAgro (BBB/BBB+/Stable).
Fitch expects that Baiterek and its subsidiaries will receive 300 billion tenge (183.52 tenge = $1) equity injections from the budget and 430 billion tenge subsidised loans from the National Fund of the Republic of Kazakhstan in 2014-2016.
Fitch considers the ability of the State to extend extraordinary support, in case of need, as high. Kazakhstan's debt is low (13.5 percent of GDP as of 1 January 2014), while foreign-currency reserves are equivalent to about 47 percent of 2013 GDP and in the light of Baiterek's strategic role, Fitch believes the government's willingness to provide extraordinary support is also strong.
Baiterek's ratings mirror those of the sovereign. A positive rating action would result from an upgrade of Kazakhstan. Conversely, a negative rating action on Kazakhstan or weakening of Baiterek's links with the State, as evidenced by issuance of material unguaranteed market debt, would lead to a downgrade.