BAKU, Azerbaijan, Apr. 16
By Nargiz Sadikhova - Trend:
The coronavirus outbreak will not have an immediate negative impact on Kazakh government-related entities (GREs), as the state has substantial capacity and retains sufficient incentives to provide extraordinary support to its GREs, if needed, Trend reports with reference to the Fitch Ratings forecast.
However, Fitch said, Kazakh GREs' ratings may be affected should the Kazakhstan’s ratings change as their IDRs are directly dependent on the sovereign IDR.
“All GREs rated by Fitch in Kazakhstan benefit from strong links to the Kazakhstan state, leading to a high likelihood of exceptional state support in the event of financial difficulties. The entities' GRE scores are high enough to justify the application of a top-down rating approach towards their ratings. This is due to the state's strong control over the entities and the negative sociopolitical an financial consequences of their potential default,” Fitch said.
Most of the GREs' Issuer Default Ratings (IDR) would therefore be negatively affected by a negative rating action on the sovereign's IDRs, the report said.
“Among the nine Fitch-rated GREs in Kazakhstan, only Kazakhstan Temir Zholy and Samruk-Kazyna Construction's IDRs reflect interaction between GRE scores and their stand-alone credit profile assessment (SCP), which indicates their ability to service their debt excluding any extraordinary intervention from the state. These two entities' SCPs would affect their IDRs only if the SCPs were lowered to more than four notches below the sovereign IDR,” the report said.
“The central government has enough capacity to support GREs in case of any economic disturbance. However, if the situation becomes severe and causes a negative reassessment of Kazakhstan' sovereign IDRs, we will assess the policy response and potential central government support to determine how this will affect the GREs' ratings,” the report said.
Fitch rates nine public entities in Kazakhstan based on its "Government-Related Entities Rating Criteria":
- Sovereign Wealth Fund Samruk-Kazyna JSC (BBB/Stable),
- National Management Holding Baiterek (BBB/Stable),
- KazAgro National Management Holding JSC (BBB/Stable).
- Kazakhstan Sustainability Fund Joint-Stock Company (BBB/Stable),
- National Company Kazakhstan Temir Zholy (BBB-/Stable),
- Agrarian Credit Corporation (BBB-/Stable),
- KazAgroFinance JSC (BB+/Stable),
- Kazakhstan Mortgage Company (BBB-/Stable)
- Samruk-Kazyna Construction JSC (BB+/Stable).
---
Follow the author on twitter: @nargiz_sadikh