Moody's assigned a Baa3 issuer rating to Kazpost; stable outlook

/Moody's, Milan, February 4, 09/ - Moody's Investors Service has today assigned a Baa3 foreign currency issuer rating and a National Scale Rating of Aa3.kz to Kazpost JSC. The rating outlook is stable. This is the first time Moody's has assigned a rating to Kazpost. By virtue of Kazpost's 100% ownership by the "Samruk-Kazyna", the government-owned agency whose main objective is to track and develop the key strategic assets and investments of the country, Kazpost is considered by Moody's a Government-Related Issuer (GRI). In accordance with Moody's GRI rating methodology, the rating of Kazpost reflects the combination of the following inputs: - Baseline credit assessment (BCA) of 15 (on a scale of 1 to 21, where 1 represents the lowest credit risk, with the 15 being equivalent to a B2 rating) - The Baa1 local currency rating of the government of Kazakhstan - Medium dependence - High support The BCA of 15, which equates to a B2 rating, is six notches below the indicated rating of Moody's Postal and Express Delivery rating methodology of Baa2 computed using historical ratios. The BCA, however, is one notch lower than the outcome of Moody's methodology if computed with prospective ratios. The difference between the BCA and the rating methodology outcome is partially explained by Kazpost's currently strong credit metrics, which do not reflect the expected increase in financial debt due to the company's planned modernisation investments. The differential is also explained by the execution risks associated with the programme and a degree of uncertainty relating to the heightened political, judicial and economic risk of the Kazakhstan operating environment, which is not entirely reflected in the methodology. The BCA assessment takes into account the relatively low business risk profile of the company thanks to (i) the stable postal business, and (ii) the support provided by the financial service operations, which are currently operated with limited risk for the company and help share the cost of the postal office network. However, the BCA also reflects the relatively small size of the company in conjunction with the exposure to one single economy, as well as the execution risks associated with the modernisation programme. The current rating assessment incorporates the successful financing of the company investment programme and a satisfactory liquidity profile going forward. The medium dependence reflects the fact that Kazpost generates nearly all its earnings in Kazakhstan and is therefore highly dependent on the development of the local economy. The high support reflects the current ownership of Kazpost and the lack of specific privatisation plans expected in the short to medium term. It also reflects the government's involvement in the strategic and investment decisions of Kazpost, the company's strategic role in the country both for broader postal services and the company's capability to reach rural areas where alternative infrastructures are currently poor. The stable rating outlook reflects Moody's expectation that the company will successfully make progress in its investment programme while the regulatory environment is expected to remain supportive of existing operations. The stable outlook also assumes that the current ownership of Kazpost will remain unchanged. For full details on Kazpost's rating rationale, please refer to Moody's Credit Opinion and New Issuer Report available on www.moodys.com. The principal methodology used in rating Kazpost is the Global Postal and Express Delivery rating methodology, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Credit Policy & Methodologies directory. Kazpost JSC is the Kazakh national postal operator active in traditional postal services. It also participates in a wide range of financial and other services, including express deliveries, logistics and transportation services. The company has approximately 22,000 employees and 3,700 post offices around the Republic of Kazakhstan. Milan Paolo Leschiutta Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service Telephone:+39-02-9148-1100 Paris Myriam Durand Managing Director Corporate Finance Group Moody's France S.A. JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 [2009-02-09]