Moody's assigns ratings to notes of daughter company of Kazakhstan Bank of development JSC
30.10.07 21:42
/REUTERS, Moscow, October 30, 07, title by KASE/ - Moody's Investors
Service has today assigned Ba3/Not-Prime long- and short-term foreign
currency and local currency issuer ratings to DBK Leasing ("DBKL"). The
outlooks for the ratings are stable.
According to Moody's, DBKL's ratings are underpinned by the company's
high capital cushion, which is sufficient to absorb credit risks (although this is
likely to gradually change), strong liquidity and niche in leasing projects. On
the other hand, the ratings reflect (i) the company's limited franchise, partly
due to the short period of its operations and resulting low profitability; (ii)
some concerns as to whether the company will be successful in significantly
increasing its franchise and funding; (iii) the lack of operating history in the
competitive environment; and (iv) the possibility of politically motivated
decisions given its ownership structure.
The Ba3 issuer rating is a two-notch uplift from the Baseline Credit
Assessment (BCA) of B2, based on Moody's assessment of the very high
probability of extraordinary support from the parent. This reflects DBKL's
100% ownership by the Development Bank of Kazakhstan (DBK, with a BCA
of 11-13), the potential reputation damage to DBK from a default of DBKL,
DBKL's small size - providing for a greater ability to provide support, as well
as DBKL's good fit with DBK's strategy. Nonetheless, the fact that DBKL is a
small company with no significant operations to date limits the importance of
DBKL to DBK and as a result diminishes support assumptions. DBKL is
closely dependant on DBK due to the fact that all funding and capital
currently come from the parent.
Successful development of the company's franchise with no excessive rise in
the risk profile, improvement in funding diversification as well as development
of risk management systems would exert upward pressure on the rating. The
transfer of DBKL's stake directly to the state (there is a small possibility that
in the future the stake of the company might be transferred to the state
holding "Sustainable Development Fund "Kazyna") could cause a positive
uplift in DBKL's issuer rating. However, this is not expected in the near term.
Inability to build a sustainable franchise, assumption of excessive risks, as
well as the inability to obtain affordable funding could lower DBKL's rating, as
could any sovereign downgrade or signs of diminished willingness on the
part of the parent to provide support.
Based in Astana, Kazakhstan, DBKL is a 100% leasing subsidiary company
of the Development Bank of Kazakhstan and was set up in 2005. It reported
total assets of USD60 million and equity USD52 million at the end of 2006.
London
Reynold R. Leegerstee
Managing Director
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moscow
Vladlen Kuznetsov
Asst Vice President - Analyst
Financial Institutions Group
Moody's Eastern Europe
Telephone: +7 495 641-1881
Facsimile: +7 495 641-1897
[2007-10-30]