S&P removed Agricultural credit corporation (Kazakhstan) from CreditWatch, Outlook "Stable"

/Standard & Poor's, Moscow, December 23, 09, Standard & Poor's English translation, KASE headline/ - Standard & Poor's Ratings Services said today that it had removed from CreditWatch and affirmed its 'BB' long-term, 'B' short-term, and 'kzA+' Kazakhstan national scale ratings on Agrarian Credit Corp. (KACC), a state-owned provider of subsidized credit to agricultural and nonagricultural businesses in rural areas throughout the Republic of Kazakhstan (foreign currency BBB-/Stable/A-3; local currency BBB/Stable/A-3; Kazakhstan national scale 'kzAAA') after KACC and Commerzbank agreed on a new and gradual repayment schedule for the $136 million loan with a breached covenant. The outlook is now stable. "The ratings are based on KACC's stand-alone credit profile, which we assess at B', plus three notches of uplift, reflecting our opinion of a "high" likelihood of timely and sufficient extraordinary support from the Kazakh government in the event of financial distress," said Standard & Poor's credit analyst Boris Kopeykin. The stand-alone credit profile is supported by significant ongoing state support to KACC, resulting in high capitalization and cheap financing. The stand-alone credit profile continues to be constrained by the largely untested quality of KACC's rapidly expanding loan portfolio in Kazakhstan's difficult operating environment, and by KACC's high lending concentration and foreign currency risks on a portion of its debt. KACC's relatively low balance-sheet liquidity also constrains the stand-alone credit profile. In accordance with our criteria for government-related entities, our view of a "high" likelihood of extraordinary government support is based on our current assessment of KACC's "important" role for and "very strong" link with the Kazakh government. "The stable outlook reflects the expectations of continued strong ongoing support to KACC in 2010-2012, resulting in strong capitalization levels and good liquidity," said Mr. Kopeykin. It also reflects our expectation that our assessment of a "high" likelihood of extraordinary government support will not change. We will also continue to monitor the effects of the continued turmoil in Kazakhstan's economy and financial system on KACC's loan portfolio performance. Stronger probability of extraordinary support, or positive momentum in the stand- alone credit profile, with improving liquidity and profitability, might lead to positive rating actions on KACC. Negative rating actions on the sovereign, or signs of lower probability of extraordinary support, might result in negative rating actions on KACC. Deterioration of the stand-alone credit profile, with weakening liquidity and growing problem assets in KACC's portfolio, might also result in negative rating actions. Related research: - Enhanced Methodology And Assumptions for Rating Government-Related entities, June 29, 2009. For details: Boris Kopeikin, Moscow, 7 (495) 783-40-62 Ekaterina Trofimova, Paris, 33 (1) 44-20-67-86 Analysts e-mails: boris_kopeykin@standardandpoors.com ekaterina_trofimova@standardandpoors.com [2009-12-24]