ASTANA, Kazakhstan, December 9. Fitch Ratings has affirmed Kazakhstan's Almaty city's Long-Term Issuer Default Ratings (IDR) at 'BBB' with a stable outlook, Trend reports.
The affirmation reflects Fitch's expectations that Almaty's payback ratio will remain commensurate with the ratings under Fitch's rating-case scenario (below 5x in 2027).
"The city's IDRs are one notch below its Standalone Credit Profile (SCP) of 'bbb+', as they are capped by Kazakhstan's sovereign IDRs (BBB/Stable)," Fitch said.
The assessment reflects Fitch's view of high risk relative to international peers that the city's ability to cover debt service with the operating balance may weaken unexpectedly over the forecast horizon 2023-2027 due to lower revenue, expenditure or an unanticipated rise in liabilities or debt-service requirements.
Fitch noted that Almaty's full-year revenue remained sound in 2022 and on an interim basis in 2023. The city's revenue base is primarily supported by taxes and transfers from the central budget. Since 2020, the city has received proceeds from corporate income tax collected from profits of small and some medium-sized enterprises. This comprised about 58 percent of total revenue in 2022.
Almaty's 'F2' Short-Term IDR reflects a 'Midrange' assessment of the liabilities and liquidity robustness and liquidity coverage ratio at above 1.3x throughout the rating case.
Almaty is the largest city in Kazakhstan with a population of over two million residents in 2022 (10 percent of the national population). Almaty contributes about 20 percent to the country's GDP and is an important economic and financial center.
The city's budget accounts are based on cash, while the law on the budget is approved for three years.