S&P: Kazakh ORDA Credit Assigned 'CCC+/C' And 'kzB+' National Scale Ratings; Outlook Stable

/Standard & Poor's, London, February 26, 08/ - Standard & Poor's Ratings Services said today that it assigned its 'CCC+/C' long- and short-term counterparty credit and 'kzB+' Kazakhstan national scale ratings to ORDA Credit. The outlook is stable. "The ratings on ORDA Credit are constrained by its very small domestic franchise with a developing strategy, a limited and concentrated borrower and depositor base, and limited access to wholesale funding," said Standard & Poor's credit analyst Magar Kouyoumdjian. Its relatively strong regional position, tight control over credit underwriting systems and good knowledge of borrowers, stable management team, and good capitalization and profitability are supporting rating factors. ORDA Credit is a small credit union/cooperative with a balance sheet of less than Kazakhstani tenge 4 billion ($33 million) at Sept. 30, 2007. This gives it a 2.5% share of loans among credit unions, with a much higher 31% in the south of the country. It does not have its own distribution network and reaches customers through the eight branches of its microfinance subsidiary, Arnour Credit (not rated). The latter, as well as strong interaction with microcredit organizations, allows ORDA Credit to broaden its client base outside its members, to render credit services to different classes of the population. "The stable outlook balances ORDA Credit's very small absolute size and developing strategy, with its good niche position and good knowledge of its customers," added Mr. Kouyoumdjian. Any potential upgrade will depend on a longer track record and successful implementation of establishing a more solid market presence, success of widening its shareholder and client base and potentially attracting a strategic investor, and maintenance of adequate capitalization levels and good asset quality. Conversely, deterioration in liquidity, capitalization, and asset quality could put downward pressure on the ratings. If ORDA Credit succeeds in acquiring a banking license, it could face significant challenges to grow outside its comfort zone and compete against much larger and established banks. This could exert pressure on its ratings, particularly if done without the backing of a strong strategic shareholder. Primary Credit Analyst: Magar Kouyoumdjian, London, (44) 20-7176-7217; magar_kouyoumdjian@standardandpoors.com Secondary Credit Analyst: Ekaterina Trofimova, Paris, (33) 1-4420-6786; ekaterina_trofimova@standardandpoors.com Additional Contact: Financial Institutions Ratings Europe; FIG_Europe@standardandpoors.com [2008-02-27]