S&P assigned Development Bank of Kazakhstan's Upcoming $2 Billion EMTN Program 'BBB-' rating
28.10.07 10:13
/Standard & Poor's, London, October 25, 07/ - Standard & Poor's Ratings
Services said today it assigned its 'BBB-' senior unsecured debt rating to
Development Bank of Kazakhstan's (DBK; BBB-/Stable/A-3) upcoming $2
billion EMTN program.
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 the
Republic of Kazakhstan (foreign currency BBB-/Stable/A-3; local currency
BBB/Stable/A-3; Kazakhstan national scale kzAAA). Strong sovereign
support is also ensured by DBK's ownership structure: The state wholly
owns Kazyna, its sustainable development fund, which in turn wholly owns
and manages DBK.
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 aims 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. In 2007, the
government reaffirmed its support for the bank by increasing DBK's paid-in
capital to Kazakhstani tenge (KZT) 90.9 billion ($758 million) from KZT70.6
billion in 2006. The government is expected to increase DBK's capital to
about KZT132.5 billion in 2008.
The increases in DBK's capital are an integral part of the second stage of
the government's 2004-2015 strategic program for industrial and innovation
development.
Loan commitments have increased and diversified significantly since the
inception of the bank. Nonetheless, the bank is expected to expand its loan
portfolio prudently in a high-risk market environment and to continue to
adhere to conservative policies on leverage ratios.
Standard & Poor's does not expect any changes 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:
Ben Faulks, London (44) 20-7176-7108
ben_faulks@standardandpoors.com
Secondary Credit Analyst:
Luc Marchand, London (44) 20-7176-7111
luc_marchand@standardandpoors.com
Additional Contact:
SovereignLondon@standardandpoors.com
[2007-10-28]