Fitch rates Kazakhstan's National Management Holding Baiterek 'BBB+'
The International Rating Agency Fitch Ratings has assigned
Kazakhstan's Joint Stock Company National Management Holding
Baiterek a Long-term foreign currency Issuer Default Rating (IDR)
of 'BBB+', a Long-term local currency IDR of 'A-', a National
Long-Term rating of 'AAA(kaz)' and a Short-term foreign currency
IDR of 'F2', the rating agency reported on July 14.
The Outlooks on the Long-Term ratings are Stable.
Fitch has also assigned a Long-term local currency rating of 'A-'
and a National Long-term Rating of 'AAA(kaz)' to Baiterek's 100
billion tenge (equivalent to $0.5 billion) senior unsecured
domestic bond purchased by the National Fund of the Republic of
Kazakhstan.
"Baiterek's ratings are equalised with those of Kazakhstan
(BBB+/A-/Stable) to reflect the high probability of support, in
case of need, from the State. This is based on Baiterek's
100-percent state ownership and its special status as a national
management holding company, specifically as the development arm of
the government," Fitch said.
The ratings also reflect significant state-originated funding for
Baiterek and associated risks of direct lending. Fitch uses its
public-sector entities criteria and applies a top-down approach in
its analysis of Baiterek.
Baiterek is one of three national management holding companies and
performs a key function of the government in developing the
national economy. It was established in May 2013 by a decree of the
President of Kazakhstan. The other two management holding companies
are Samruk-Kazyna (BBB+/A-/Stable) and KazAgro
(BBB/BBB+/Stable).
Fitch expects that Baiterek and its subsidiaries will receive 300
billion tenge (183.52 tenge = $1) equity injections from the budget
and 430 billion tenge subsidised loans from the National Fund of
the Republic of Kazakhstan in 2014-2016.
Fitch considers the ability of the State to extend extraordinary
support, in case of need, as high. Kazakhstan's debt is low (13.5
percent of GDP as of 1 January 2014), while foreign-currency
reserves are equivalent to about 47 percent of 2013 GDP and in the
light of Baiterek's strategic role, Fitch believes the government's
willingness to provide extraordinary support is also strong.
Baiterek's ratings mirror those of the sovereign. A positive rating
action would result from an upgrade of Kazakhstan. Conversely, a
negative rating action on Kazakhstan or weakening of Baiterek's
links with the State, as evidenced by issuance of material
unguaranteed market debt, would lead to a downgrade.