Baku, Azerbaijan, August 20
By Nargiz Sadikhova – Trend:
Fitch Ratings has assigned Kazakhstan's Samruk-Kazyna Construction JSC (SKCN) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) of 'BB+' and a National Long-Term Rating of 'AA (kaz)', Trend reports with reference to Fitch.
“The Outlooks are Stable. SKCN is a government related entity (GRE) that provides essential public services,” the report said.
The status, ownership and control of SKCN are assessed as strong. According to the report, SKCN is authorised by the government to implement its state housing policy but operates under a general legal regime and Fitch does not expect any changes to SKCN's legal status, control and ownership over the medium term.
“Support Track Record Assessed as Very Strong. The operations and adequate financial profile of SKCN are underpinned by consistent state support. The company almost entirely relies on state funding to implement several long-term state programs with little exposure to market debt. As the agent of several state programs, it has been receiving continuous financial support since its inception in 2009 and subsidized loans from the state via its parent company,” the report said.
Fitch also assessed financial implications of default of SKCN as moderate. Fitch noted that SKCN has a separate budget and its debt is not consolidated in the general government's accounts. In Fitch's view the share of market debt exposure should remain low over the medium term.
“Revenue-Defensibility Assessed at Midrange. Since demand for residential real estate in Kazakhstan is much higher than supply due to such factors as migration, demographic improvement and urbanization, Fitch assesses demand as 'Midrange'. It is Fitch's view that SKCN has limited flexibility in increasing prices of their affordable housing activities, which are controlled by the shareholder and the government,” the statement said.
Furthermore, the operating risk of SKCN was assessed as weaker.
“Fitch assesses operating risks as 'Weaker' due to cost volatility in an evolving Kazakh housing market,” the report said.
Fitch has also assessed the financial profile of SKCN as weaker.
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