Development Bank of Kazakhstan Ratings Raised To 'BBB' On Sovereign Upgrade; Outlook Stable

/Standard & Poor's, London, November 2, 06/ - Standard & Poor's Ratings Services said today it raised its foreign and local currency long-term ratings on the Development Bank of Kazakhstan (DBK) to 'BBB' from BBB-'. At the same time, the A-3' foreign and local currency short-term ratings on DBK were affirmed. The outlook is stable. This upgrade follows the rating action on the Republic of Kazakhstan (foreign currency BBB/Stable/A-3 local currency BBB+/Stable/A-2) (see "Research Update: Kazakhstan FC/LC L-T Sovereign Ratings Raised To 'BBB/BBB+' On Strong Balance Sheet; Outlook Stable" published today on RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis. "The ratings on DBK reflect the Bank's strong financial profile, and its clearly defined and strategic public policy role assigned by the government of Kazakhstan. DBK's 100% ownership by the state also ensures strong implicit sovereign support, " said Standard & Poor's credit analyst Luc Marchand. DBK is the primary vehicle for providing long-term credit to the nonextractive sectors of the Kazakh economy, and the expansion of these sectors is one of the main strategic development targets of the government. The sovereign does not guarantee DBK's obligations, although it keeps the Bank well capitalized relative to the size of its business. "The stable outlook on DBK reflects that on Kazakhstan and the Bank's continued strong financial profile," said Mr. Marchand. "Moreover, it reflects the prospect of continued strong government support as demonstrated by past increases in the Bank's capital, and the expected expansion of the Bank's capital and budgetary loans." In 2006-2008, the government is expected to increase DBK's capital by US$100 million annually. In the foreseeable future, no changes are expected in the policy and regulatory framework that would weaken the Bank's key policy role in the government's development plans. Nevertheless, a deviation from DBK's policy role, or signs of weakening government support, would result in downward pressure on the ratings. Primary Credit Analyst: Luc Marchand, London, (44) 20-7176-7111; luc_marchand@standardandpoors.com Secondary Credit Analyst: Felix Ejgel, Moscow, (7) 495-783-4060; felix_ejgel@standardandpoors.com [2006-11-02]