Various Kazakh GRE ratings affirmed and off watch on review of relationship with sovereign

/Standard & Poor's, London, October 29, 07/ - Standard & Poor's Ratings Services today announced that it had affirmed the ratings on several Kazakhstan-based government-related entities (GREs). All ratings were also removed from CreditWatch with negative implications, where they had been placed on Oct. 3, 2007, following the CreditWatch listing of the Republic of Kazakhstan (foreign currency BBB-/Stable/A-3; local currency BB/Stable/A- 3). "The rating actions follow a review of Kazakhstan's links with several GREs, including an assessment of the application of our GRE criteria," said Standard & Poor's credit analyst Elena Anankina. The long-term corporate credit rating on 100% government-owned vertically integrated oil and gas holding JSC NC KazMunayGas (KMG) was affirmed at 'BBB-'. The outlook is stable. The rating on KMG continues to be based on a top-down approach, which links it to the local currency rating on the sovereign. "The affirmation despite the one-notch sovereign downgrade on Oct. 3, 2007, reflects that the difference between the sovereign local currency rating and the corporate credit rating on KMG has been reduced to one notch from two," Ms. Anankina added. "We have taken this step to reflect the Kazakh government's rising resource nationalism and state intervention in the oil and gas industry." This trend is strengthening KMG's role as the government's key and quasi- exclusive agent in the strategically vital hydrocarbon sector and reinforcing the company's links with the sovereign, thereby increasing the likelihood of extraordinary timely state support. At the same time, the 'BB+' ratings on KMG's subsidiaries KazTransOil (KTO) and JSC KazMunaiGas Exploration Production (KMG EP) were affirmed. The 'BB' ratings on KazTransGas (KTG) and its 100% subsidiary JSC InterGas Central Asia (ICA) were also affirmed. This reflects the application of our parent-subsidiary criteria for all four entities, as well as a review of the companies' stand-alone creditworthiness and their links with KMG. The outlook on KTO is positive, reflecting potential rating upside from its strengthening stand-alone credit quality. The outlook on KMG EP, KTG, and ICA is stable, mirroring that on KMG. Standard & Poor's also affirmed its 'BB+' long-term corporate credit rating on 100% government-owned Kazakhstan Electricity Grid Operating Co. (JSC) (KEGOC). The outlook is stable, mirroring that on Kazakhstan. The rating is based on a top-down approach and is two notches below that on the sovereign, reflecting KEGOC's strategic importance to the country as the owner and operator of the core high-voltage electricity grid. In addition, the 'BB+' corporate credit and 'kzAA-' Kazakhstan national scale ratings on 100% government-owned national railroad company Kazakhstan Temir Zholy (KTZ) were affirmed. The outlook is stable and mirrors that on the sovereign. We now apply a top-down approach to the ratings on KTZ, as is already the case for KMG and KEGOC, and the ratings reflect the company's high reliance on strong government support. For KTZ, the top- down approach reflects the company's strategic importance based on its position as a national rail monopoly, transporting 58% of national freight traffic and employing 2% of the national labor force. The 'BB+' rating on KTZ's 100% subsidiary JSC Kaztemirtrans (KTT) was also affirmed, with the stable outlook mirroring that on the parent. The ratings on KTT are equalized with those on KTZ. Primary Credit Analyst: Elena Anankina, London (44) 20-7176-3802; elena_anankina@standardandpoors.com Eugene Korovin, Moscow (7) 495-783-4090; evgueni_korovin@standardandpoors.com Secondary Credit Analyst: Emmanuel Dubois-Pelerin, Paris (33) 1-4420-6673; emmanuel_dubois-pelerin@standardandpoors.com Ben Faulks, London (44) 20-7176-7108; ben_faulks@standardandpoors.com Additional Contact: Industrial Ratings Europe; CorporateFinanceEurope@standardandpoors.com Infrastructure Finance Ratings Europe; InfrastructureEurope@standardandpoors.com [2007-10-30]