BAKU, Azerbaijan, February 1. Moody's affirmed the Kazakh Industrial Development Fund (IDF) JSC's long-term local and foreign currency Corporate Family Ratings and long-term local and foreign currency issuer ratings at Ba2, a source at Moody’s told Trend.
The outlook on the issuer is changed to positive from stable.
Moody's decision to affirm IDF's Ba2 long-term ratings and change the issuer outlook to positive from stable reflects upward pressures on its standalone assessment of b2, driven by improved capital and asset quality metrics and a stable funding and liquidity position. The ratings continue to incorporate three notches of rating uplift from Moody's assumptions of very high support considerations from its immediate parent, the Development Bank of Kazakhstan (DBK).
The upward pressure on IDF's b2 standalone assessment reflects already received and anticipated ongoing capital and funding support from its parent, DBK. IDF's tangible common equity has almost doubled since end-2020 and 100 billion Kazakh tenge ($217.5 million) of new capital is expected in 2023, which will increase IDF's tangible common equity by 48 percent.
According to Moody's these capital injections and new government funding demonstrate the elevated importance of IDF in fulfilling the strategic policy objectives of Kazakh government.
“Ratings could be upgraded if capital injections from the sole shareholder continue, which will significantly increase the company's loss absorption capacity, combined with further evidence that asset quality metrics stabilize at their current lower levels," Moody’s said.
A negative rating action could occur in the event of unexpected losses in the leasing portfolio, which could substantially impair its capitalization, or in the event of a material weakening in the capacity or willingness of its parent to provide support.
Moody's provides international financial research on bonds issued by commercial and government entities. The organization aims to improve business decision-making by promoting clarity, knowledge and transparency, as well as reducing risks within the global business community.