S&P downgrades BTA Bank (Kazakhstan) ratings and confirmed its subsidiaries ratings

/Standard & Poor's, Frankfurt, April 24, 09, translation from English of Standard & Poor's, KASE headline/ - Standard & Poor's Ratings Services said today that it had lowered its long- and short-term counterparty credit ratings on Kazakhstan- based BTA Bank J.S.C. (BTA) to 'D' (default) from 'CC' and 'C' respectively after BTA announced a standstill in the scheduled and accelerated principal components of its debt. The ratings were removed from CreditWatch, where they were placed with negative implications on March 20, 2009. At the same time the ratings on BTA's subsidiaries, Temirbank JSC and BTA Ipoteka Mortgage Co. (BTAI), were affirmed at 'CC/Watch Neg/C'. "We understand that BTA imposed a standstill on principal payments, including scheduled maturities, on its foreign and domestic wholesale debt with effect from April 20, 2009 until it implements a group-wide debt restructuring plan," said Standard & Poor's credit analyst Annette Ess. According to our definition, a 'D' rating is assigned when we believe that any default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. Our default definition includes payment defaults on both rated and unrated financial obligations. In addition, under our criteria, we treat distressed exchange offers to restructure debt obligations as equivalent to a default on the part of the issuer, even though, technically, investors may accept such an offer voluntarily and no legal default occurs. BTA's total foreign debt outstanding is about $12 billion, with about $4 billion maturing in 2009. The bank announced that it is not in a position to repay the $12 billion sum if it were accelerated. It also announced that it intends to pay due interest on foreign and domestic debt. We understand that BTA is so far continuing to service its retail depositors. We understand that the Samruk Kazyna National Welfare Fund, the main shareholder in the bank with a 78% stake, is not willing to assist BTA. We have affirmed the ratings on BTAI and Temirbank because they are not included in BTA's standstill on principal payments and they continue to service their obligations. However, BTA announced that these subsidiaries will be included in the restructuring of the BTA group. Accordingly, we see an increased likelihood that the ratings on BTAI and Temirbank will be lowered to 'D' in the near term. We will lower the ratings on BTAI and Temirbank to 'D' in the event that they default on all or substantially all of their debt, initiate a wide-ranging distressed restructuring of their debt obligations, or declare bankruptcy or insolvency. We would consider revising the ratings on BTA, BTAI, and Temirbank if the entities were to restore and sustain their repayment capacity and were to service all their debt obligations on a timely basis and avoid distressed debt restructuring, either through government support or improvements in their stand-alone credit profiles. For detailed information: Anette Ess, Frankfurt, 49 (69) 33 99-9-1-57 Ekaterina Trofimova, Paris, 33 (1) 44-20-67-86 Magar Kouyomjian, London, (44) 20-7176-7217 Analysts e-mails: annette_ess@standardandpoors.com ekaterina_trofimova@standardandpoors.com magar_kouyoumdjian@standardandpoors.com FIG_Europe@standardandpoors.com quotation end [2009-04-27]