ASTANA, Kazakhstan, October 28. Fitch Ratings has affirmed JSC National Management Holding Baiterek's (Baiterek) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB' with stable outlooks, Trend reports.
The affirmation reflects Fitch's expectations of the Kazakh government's (BBB/Stable/F2) continuing strong ability and willingness to provide support to Baiterek.
The assessment stems from the state's control of Baiterek, full government ownership, and its special legal status as a national management holding company. Out of nine board members, six are from the government. Baiterek's shares cannot be sold, pledged or seized. Fitch therefore believes that in the event of distress, all of Baiterek's assets and liabilities would be unconditionally transferred back to the state or a designated public entity.
Acting as a state agent, Baiterek passes on funding to its subsidiaries to implement policy in their respective areas, all linked to national economic development. Fitch expects Baiterek to continue receiving direct and indirect state support in the medium term.
Fitch believes it would be difficult to immediately replace Baiterek in case of default, due to its strategically important development functions. Consequently, disruptions to Baiterek's operations could lead to long-term economic implications for Kazakhstan. The large number of development institutions operating under Baiterek and the importance of the agricultural sector in Kazakhstan (around 5 percent of GDP) underline Fitch's assessment of 'Strong' socio-political implications of default, and the assessment is reinforced by Baiterek's role as the transitional owner of Bereke Bank JSC (BB/Stable).
Baiterek implements Kazakhstan's strategic policies for economic diversification and development, in three key sectors: SMEs and export-oriented processing industries; affordable housing; and lending and leasing services to agricultural businesses.