Fitch Affirms Astana Finance ratings and assigns ratings to Leasing company Astana Finance JSC
24.12.08 16:17
/Fitch Ratings, London-Moscow, December 23, 08/ - Fitch Ratings has today
affirmed Kazakhstan-based JSC Astana Finance's (AF) ratings, including its
Long-term Issuer Default rating (IDR) at 'BB' with Negative Outlook, and its
Individual rating at 'D/E'. The agency has also today assigned ratings to AF's
leasing subsidiary JSC Astana Finance Leasing Company (AFL). A full list of
ratings follows at the end of this announcement.
AF's IDRs and its Support rating reflect what Fitch considers is a moderate
probability that support would be made available to AF from its 25.5%
beneficial shareholder, state-owned Fund for National Welfare 'Samruk-
Kazyna' or potentially the Kazakhstani sovereign (rated Long-term IDR BBB-
(BBB minus)/Outlook Negative), in the event of need. Samruk-Kazyna was
formed in H208 after the government decided to merge the state-owned
Fund for Sustainable Development 'Kazyna' with Kazakhstan Holding for
Management of State Assets 'Samruk'. Kazyna has provided a letter of
comfort to AF's noteholders, lenders and other interested parties which, in
Fitch's opinion, creates a strong moral obligation on the part of Samruk-
Kazyna and/or the Kazakhstani sovereign to support AF, if needed. The
Negative Outlooks on Foreign and Local currency IDRs are aligned with
those on Kazakhstan's sovereign ratings.
AF's Individual Rating reflects risks associated with AF's deteriorating asset
quality, substantial loan and funding concentrations on both sides of the
balance sheet and high, albeit much reduced, leverage. It also recognises
Fitch's concerns regarding AF's significant dependence on foreign wholesale
funding and the challenging operating environment. Earnings are likely to
weaken further as asset quality weakens in a deteriorating economic climate
in Kazakhstan. Furthermore, mark-to-market losses on securities in H208
could make the group loss-making, and the agency notes that the group is
finding it increasingly hard to find willing counterparties to hedge FX risks. On
balance, therefore, there are more downside risks to AF's Individual Rating
than there is upside potential.
Fitch believes AF would have a very high propensity to provide timely
financial support to AFL should it be needed because of AFL's shared name,
full ownership, strategic importance and cross-default clauses in AF's own
Eurobond documentation. Intra-group receivables/payables are also very
high, making it hard to differentiate potential default risk with AF. Fitch
believes Samruk-Kazyna would support AF if it needed resources to support
AFL. AFL's ratings have, therefore, been aligned with those of AF.
Following discussions with AF, Fitch understands that the change of control
clauses are not triggered by Samruk-Kazyna being owner of the 25.5% stake
in AF and that Samruk-Kazyna will shortly issue a new comfort letter in
respect of AF's obligations that is similar to (and will replace) the existing,
strongly worded letter from Kazyna. If not, the ratings of AF and AFL could
be vulnerable to downgrades of more than one notch.
AF's term funding is sourced mainly from the local and international debt
capital markets and banks, but is predominantly long-term in nature.
Reliance on wholesale sources is a weakness, given that AF's access to
international funds at an acceptable price has been severely affected by the
global credit crunch. At end-November 2008, Fitch has been informed that
AF had around KZT40bn (USD330m) of freely available cash and securities
eligible for repo. Debt repayments were/are KZT6bn in December, KZT5bn in
January and KZT15bn in February, primarily AF's debut USD125m
Eurobond. Thereafter, debt repayments due over the rest of 2009 are only
around KZT4bn. New lending is presently extremely limited because of AF's
severely restricted access to new funding outside ECA-backed loans and
local borrowings. Liquidity from loan repayments is being partially used to
buy back debt, Fitch understands.
AF was created in 1997 by the Municipality of Astana to facilitate
development finance (loans, leasing and equity) for Astana, the capital of
Kazakhstan, and for the surrounding Akmola region. It has since diversified
geographically and into certain aspects of investment banking.
Rating actions are as follows:
JSC Astana Finance
Long-term IDR: affirmed at 'BB' with Negative Outlook
Local currency Long-term IDR: affirmed at 'BB' with Negative Outlook
Short-term IDR: affirmed at 'B'
National Long-term rating: affirmed at 'A+(kaz)' with Stable Outlook
Individual rating: affirmed at 'D/E'
Support rating: affirmed at '3'
Support Rating Floor: affirmed at 'BB'
Senior unsecured debt: affirmed at 'BB'
JSC Astana Finance Leasing Company
Long-term IDR: assigned at 'BB' with Negative Outlook
Short-term IDR: assigned at 'B'
Local Currency LT IDR: assigned at 'BB' with Negative Outlook
National Long-term Rating: assigned at 'A+(kaz)' with Stable Outlook
Support rating: assigned at '3'
Contact
James Longsdon, London
Tel: +44 207 417 4309.
Media Relations
Alla Izmailova, Moscow, Tel: +7 495 956 9903
Email: alla.izmailova@fitchratings.com
Hannah Warrington, London
Tel: +44 (0) 207 417 6298
Email: hannah.warrington@fitchratings.com
[2008-12-24]