Moody's affirmed the ratings of National Company Kazakhstan Temir Joly JSC at Baa3, estimates to be Stable
28.04.10 17:31
/IRBIS, April 28, 2010/ - Moody's Investors Service confirmed the rating of the
issuer of JSC National Company "Kazakhstan Temir Joly" (KTZ) at the Baa3
senior unsecured rating and Eurobond of $800 million, issued a special
financial company of Kazakhstan Temir Zholy Finance BV and guaranteed by
KTZ and its subsidiaries - at Baa3. This rating agency reported on April 27.
Simultaneously, Moody's confirmed the corporate family rating (CFR) SA
Kaztemirtrans (CTT) at Ba1. KTT is one of the key subsidiaries of KTZ and
managed as an integral part of KTZ. The outlook is "stable".
As indicated, these rating actions complete a review Moody's ratings for
possible reduction, which began on Feb. 8, 2010. Survey reflects the concern of
Moody's view that the financial and liquidity profiles of KTZ may have the
potential pressure from their large investment needs and material debt maturing
within the next 18 months, in particular, refers to bonds of the $450 million,
canceling in May 2011.
Moody's welcomes the recent decisions on state funding to cover part of the
investment program of KTZ and reaffirms the commitment of the State JSC
National Welfare Fund SamrukKazyna, the sole shareholder of the group,
support group, if necessary for the timely repayment of its debt of $450 million
As a result, the agency fears that led to a review, have been relaxed. Moody's
expects that further significant negative pressure on the group KTZ is now
apparent, as reflected in the "stable" forecast on ratings.
In accordance with the decision of the relevant organs of the Republic of
Kazakhstan, in 2010, a group of KTZ should receive from the government
KZT30 billion ($200 million) in capital injections and loans for the same amount
of low-interest financing for two projects in infrastructure. The amounts of
principal and interest payments on loans will be covered by equity injections
from the national budget for the coming years. In addition, government
guarantees of KZT25 billion ($167 million) were approved for a group of KTZ, to
facilitate access to reasonably priced commercial financing for investment
projects. Together with the previously introduced higher rates for 2010,
tentatively approved an increase in the coming years, as subsidies for
passenger transport, government decisions related to financing, will help the
company's ability to manage their financial profile commensurate with its
current rating.
Liquidity groups still maintained their large cash reserves (KZT55.4 billion, or
about $360 million at the beginning of April 2010), including cash, earmarked
for repayment of bonds in May 2011. Moody's believes that in addition to the
plan, the accumulation of funds for repayment of bonds, the KTZ there are
other options for further convenience, the refinancing profile, based on its
good relations with foreign bank partners and the experience of the bond issue.
However, given the mentioned significant maturity, while external mechanisms
are not signed refinancing, liquidity is still depending on the actual capital
cost of KTZ compared with its great program, its ability to generate cash flow
in accordance with the plan.
At the same time, Moody's continues to note the risks associated with weak
domestic banking system in Kazakhstan, where the group should place their
temporarily free funds, although the agency understands that KTZ seeks to
retain a portion of its cash reserves set aside for repayment of the bonds.
Taking note of the risk of potential pressure on the liquidity of the company,
at this stage, Moody's takes additional support for the commitment
SamrukKazyna, which was confirmed by the agency to provide support for KTZ,
in case the need for timely repayment of the bonds in May 2011.
[2010-04-28]