ASTANA, Kazakhstan, September 28. Fitch Ratings agency has upgraded Kazakhstan's Qazaqstan Investment Corporation JSC's (QIC) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'BBB-' from 'BB+' with a stable outlook, Trend reports.
The upgrade reflects Fitch's view of QIC's increased integration with the state, following the consolidation of QIC as a unified alternative investment platform in Kazakhstan. As a result, Fitch has reassessed status, ownership, and control to 'Very Strong' from 'Strong', which resulted in a total support score of 35 under Fitch's Government-Related Entities (GRE) Criteria and led to a narrowing of the rating differential with the sovereign to one notch.
In Fitch's view, the government's ability and willingness to provide QIC support remain very high. In order to implement government investment programs, the state invests in the equity capital of QIC, which grew by 69 percent in 2021-2023 and amounted to 147.8 billion tenge (about $307 million) at the end of the first half of 2023 (with equity capital amounting to 223.5 billion tenge (about $464 million), the increase over the same period was 58 percent). The state also provided long-term debt financing for agricultural development projects and social infrastructure development projects, the report noted.
However, Fitch analysts highlight the significant socio-political consequences in the event of a QIC default, which could temporarily jeopardize the execution of government investment programs, as well as measures taken by the state over the past 10 years to develop the private equity infrastructure in Kazakhstan.
The fund finances projects from renewable energy to food processing, infrastructure, and natural resources. These projects, in Fitch's opinion, are of high importance for the state as part of the strategic goal of diversifying the national economy.
Fitch also noted that QIC's sole shareholder, Baiterek Holding, provides support and supervision of the corporation's activities. The functions that QIC performs are close to government functions, which reinforces Fitch's expectations regarding possible involvement and financial support from the government to prevent the organization from defaulting.