Kazkommerts Finance 2 B.V. Proposed Subordinated Loan Participation Notes Rated "BB-"

/Standard & Poor's, London, July 20, 06/ - Standard & Poor's Ratings Services said today that it assigned its "BB-" debt rating to the Subordinated Loan Participation Notes to be issued by, but without recourse to, Kazkommerts Finance 2 B.V. (KF2), a Netherlands-based special-purpose vehicle. The Subordinated Loan Participation Notes will be issued for the purpose of financing a subordinated loan to Kazakhstan-based Kazkommertsbank (JSC) (KKB; BB+/Stable/B). The rights and interests of KF2 as lender to KKB will be charged to a trustee for the benefit of the noteholders under a trust deed. The issue matures in 2016, but is callable after five years, with a coupon step-up at the call date. The credit risk of the Subordinated Loan Participation Notes wholly reflects the creditworthiness of KKB and the subordination of the claims. The ratings on KKB reflect the rapid loan growth and significant concentrations in lending and funding in a high-risk economic and banking environment. Furthermore, fast loan growth has pressurized capitalization, which needs to be addressed soon. KKB has been using Kazakhstan's improved economic prospects to its advantage, attracting primary funds as well as international debt to fund its growing profitable lending business. The European Bank for Reconstruction and Development's (EBRD; AAA/Stable/A-1+) decision to invest into the equity of KKB has improved KKB's corporate governance. The ratings benefit from a one-notch uplift from expected government support in the event of a financial or systemic crisis, as we perceive KKB to be a systemically important bank. For details apply: Magar Kouyoumdjian, London (44) 20-7176-7217; magar_kouyoumdjian@standardandpoors.com Ekaterina Trofimova, Paris (33) 1-4420-6786 ekaterina_trofimova@standardandpoors.com [2006-07-21]