DEVELOPMENT BANK OF KAZAKHSTAN REVISED TO STABLE FROM NEGATIVE; RATINGS AFFIRMED

/Standard & Poor's, London, May 13, 09/ - On May 8, 2009, Standard & Poor's Ratings Services revised its outlook on the Republic of Kazakhstan to stable from negative. - In line with the sovereign outlook revision, we have revised the outlook on Development Bank of Kazakhstan to stable. Standard & Poor's Ratings Services today said it had revised its outlook on the Development Bank of Kazakhstan (DBK) to stable from negative. At the same time, it affirmed its 'BBB-' long-term and 'A-3' short-term issuer credit ratings on DBK. The 'kzAAA' national scale rating was also affirmed. The outlook revision follows the same action on the (foreign currency BBB-/Stable/A-3; local currency BBB/Stable/A-3; see " Republic of Kazakhstan Outlook Revised To Stable On Easing Bank Contingent Liability Concerns; Ratings Affirmed," published May 8, 2009, on RatingsDirect). "The ratings on DBK reflect the bank's clearly defined and strategic public policy role assigned by the Kazakhstan government, and its relatively robust financial profile. The state's 100% ownership of DBK ensures strong implicit sovereign support," Standard & Poor's credit analyst Ben Faulks said. "DBK is the primary vehicle for providing long-term credit to the nonextractive sectors of the Kazakh economy, and the expansion of these sectors is one of the government's main strategic development targets." The sovereign does not guarantee DBK's obligations, although it keeps the bank well capitalized relative to the size of its business. A planned capital top-up of DBK by the Republic has been delayed until 2011. Instead, in 2008 DBK was provided with a Kazakhstani tenge (KZT) 50 billion lending facility from the government's wholly owned sovereign wealth fund, "Samruk-Kazyna", which owns and manages DBK. The government is also closely involved--via the sovereign wealth fund--in defining DBK's strategy, and controls the bank through representation on the board of directors. The government does not interfere in the day-to-day operations of the bank, however. In view of the substantial development needs in Kazakhstan's infrastructure and manufacturing sectors, we believe DBK will have a vital role to play for many years to come. The stable outlook reflects that on the Republic of Kazakhstan. DBK will be upgraded if the rating on the sovereign is raised. Likewise the outlook will mirror the outlook on the sovereign rating. We expect continued strong government support to DBK as reflected by a long-term commitment to increase the bank's capital. In the foreseeable future we do not expect any changes in the policy and regulatory framework that would weaken the bank's key policy role in the government's development plans. Nevertheless, a deviation from DBK's policy role, or signs of weakening government support, would result in downward pressure on the rating. For details contact: Ben Faulks, London, 44 (207) 176 71 08 Frank Gill, London, 44 (207) 176 71 29 E-mails of the analysts: ben_faulks@standardandpoors.com frank_gill@standardandpoors.com sovereignlondon@standardandpoors.com [2009-05-14]