Baku, Azerbaijan, Feb. 26
By Elena Kosolapova - Trend:
Standard & Poor's Ratings Services lowered its long- and short-term issuer credit ratings on JSC National Management Holding Baiterek (Baiterek Holding, or the holding company) to 'BB+/B' from 'BBB-/A-3'. The outlook on the long-term rating is negative, the agency said Feb. 25.
S&P also lowered our Kazakhstan national scale rating on Baiterek Holding to 'kzAA-' from 'kzAA'.
The rating action reflects the downgrade of Kazakhstan on Feb. 17, the statement said.
S&P assesses the likelihood of extraordinary government support to the consolidated Baiterek group as almost certain:
• Integral link with the government. The state owns 100% of the holding company, which in turn fully owns its subsidiaries.
Consequently, the group credit profile (GCP) is now 'bbb-', equalized with the sovereign credit rating on Kazakhstan.
The GCP reflects the creditworthiness of the consolidated operations group, taking into account our view of extraordinary government support.
Correspondingly, S&P's ratings on Baiterek Holding are one notch lower than our assessment of the GCP. Consequently, the government's incentives to provide extraordinary support to the parent company in a stress scenario could potentially be weaker compared with some of the holding company's operating subsidiaries.
Specifically, S&P believes that the default of some of Baiterek Holding's subsidiaries will be more detrimental for the government than the default of the parent company because it is the subsidiaries that are directly involved in implementing a number of important government programs.
The negative outlook mirrors that on the sovereign. We would likely revise the outlook on Baiterek Holding if we took a similar action on the sovereign. All else being equal, a one-notch lowering of our long-term ratings on Kazakhstan could lead to a two-notch lowering of our ratings on Baiterek Holding.
S&P could also lower the ratings over the next 12 months if we saw signs of waning government support to the group.
In addition, S&P could lower the ratings if we perceived the role of Baiterek Holding for the government as reducing in contrast to the role of the overall group.
Baiterek National Management Holding includes: Development Bank of Kazakhstan JSC, Investment Fund of Kazakhstan JSC, Housing Construction Savings Bank of Kazakhstan JSC, Mortgage Organization "Kazakhstan Mortgage Company JSC, Export Credit Insurance Corporation KazExportGarant, Damu Entrepreneurship Development Fund, National Agency for Technological Development JSC, Kazakhstan Mortgage Loans Guaranteeing Fund JSC, Kazyna Capital Management JSC, Kazyna Capital Management JSC, Baiterek Development JSC, Public-Private Partnership Projects Support Center" LLP.
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