S&P Report Says Kazakh Superholding, Samruk, Won't Affect Ratings On State-Owned Companies

27.06.06 16:55
/Standard & Poor's, Moscow, June 27, 06/ - Standard & Poor's Ratings Services does not expect the Kazakh government's establishment of the fully owned state superholding Samruk to have any immediate effect on the credit quality of the rated state-controlled companies to be transferred to its control, according to a report published today on RatingsDirect titled "Kazakhstan's Samruk Superholding And Its Implications For State-Owned Companies." ""The proposed arm's-length holding-company structure is unlikely to result in additional government support to state-owned companies or affect the existing level of support and the way such support is provided," said Standard & Poor's credit analyst Eugene Korovin." Samruk's involvement in the management of the companies may, however, extend beyond the declared scope of improving efficiency and increasing market capitalization. New investments are likely to be funded through borrowing at the level of the holding company, which may consequently rely on higher dividends from the subsidiaries, resulting in a convergence in credit quality between Samruk and the latter. "Samruk should gradually replace the government as the major supporter of the subsidiaries, which will make the credit quality of the Samruk subsidiaries more dependent on that of the Samruk group as a whole," said Mr. Korovin. "Ultimately, we expect the ratings on the subsidiaries to be capped by the credit quality of the consolidated Samruk group." [2006-06-27]