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S&P assigned 'BBB+' long-term and 'A-2' short-term ratings to Kazakh KazAgro

Business Materials 25 April 2013 13:30 (UTC +04:00)
Standard & Poor's Ratings Services said on Thursday that it had assigned its 'BBB+' long-term and 'A-2' short-term issuer credit ratings and 'kzAAA' Kazakhstan national scale rating to KazAgro National Management Holding JSC
S&P assigned 'BBB+' long-term and 'A-2' short-term ratings to Kazakh KazAgro

Azerbaijan, Baku, Apr. 25 / Trend E. Kosolapova/

Standard & Poor's Ratings Services said on Thursday that it had assigned its 'BBB+' long-term and 'A-2' short-term issuer credit ratings and 'kzAAA' Kazakhstan national scale rating to KazAgro National Management Holding JSC, the primary vehicle for providing Kazakh government financial support to and developing the agricultural sector and rural areas. The outlook is stable.

Standard & Poor's equalizes the ratings on KazAgro with the ratings on its sole owner, the Republic of Kazakhstan, based on the assessment that there is an "almost certain" likelihood that the government would provide timely and extraordinary support sufficient to service all debt, should the need arise. The assessment of the likelihood of extraordinary support is based on the view of KazAgro's "integral" link to the government and KazAgro's "critical" public policy role as the primary vehicle for providing government financial support to and developing the agricultural sector and rural areas.

The government does not guarantee any of KazAgro's obligations, although the Ministry of Agriculture issued a letter of support for the holding in April 2013.

"The group credit profile of KazAgro is 'b+' and balances the company's "adequate" capitalization and strong market position with its exposure to a cyclical and risky sector, directed lending, and tight liquidity profile. We do not make any adjustments for KazAgro's group credit profile, despite its being a non-operating holding company, because we do not see any regulatory barriers that may prevent transfer of funds within a group of companies," Standard & Poor's said.

The stable outlook reflects Standard & Poor's outlook on the Republic of Kazakhstan and its expectation that assessment of KazAgro's "critical" public policy role and "integral" link with the government is unlikely to change.

Standard & Poor's could raise or lower the ratings on KazAgro if we raise or lower the ratings on Kazakhstan.

Moreover, any signs of weakening government support--either because of a change in KazAgro's policy role due to transfer of a larger-than-expected portion of direct financing functions to the private sector, or because of a weakening link with the government--may change the assessment of KazAgro's role for or link to the government, and result in downward pressure on the rating.

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