Moody's reviews five Kazakh financial institutions for downgrade
25.05.09 13:04
/Moody's Investors Service, London, May 22, 09/ - Moody's Investors
Service today placed the issuer and deposit ratings of five government-
owned Kazakh financial institutions on review for possible downgrade. Four
of the five affected entities are government-related issuers (GRIs -
government-controlled financial companies with specific policy mandates),
while the other is a bank fully owned by the government.
The rating action follows the recent default of Astana Finance, another
Kazakh GRI, in which the government (through the Samruk-Kazyna
sovereign fund) holds a 25.5% equity stake. The government has not
provided any support to Astana-Finance to avoid a default. Consequently, on
21 May 2009, Moody's downgraded Astana Finance's issuer ratings to Ca
from B3.
In the process of the ratings review, Moody's will re-examine the currently
very high government support assumptions incorporated in the affected
financial institutions' ratings. Factors that the rating agency will consider in
its assessment of systemic support include the size of the financial system in
relation to the government's resources, the level of stress in the financial
system, the foreign currency obligations of the financial system relative to the
government's own foreign exchange resources and changes to the
government's political patterns and priorities.
The ratings review is likely to result in a closer alignment of these
institutions' issuer and deposit ratings to their stand-alone financial strength,
hence possibly leading to multi-notch downgrades for selected entities. Moody's
expects to conclude the review over the next few weeks.
A list of the institutions affected by Moody's rating actions follows.
House Construction Savings Bank of Kazakhstan:
- Baa3 long-term local currency deposit rating and P-3 short-term local
currency deposit rating placed on review for possible downgrade;
- The local currency deposit rating benefits from a very high probability of
systemic support that results in a five-notch uplift from the B2 baseline credit
assessment (BCA, an indicator of standalone financial strength).
Agrarian Credit Corporation:
- Baa3 long-term local and foreign currency issuer ratings and P-2 short-
term local and foreign currency issuer ratings placed on review for possible
downgrade;
- The issuer ratings benefit from a very high probability of systemic support
that results in a five-notch uplift from the BCA of 15.
Development Bank of Kazakhstan:
- Baa2 long-term local and foreign currency issuer ratings placed on review
for possible downgrade;
- The local currency issuer rating benefits from a very high probability of
systemic support that results in a four-notch uplift from the BCA of 11-13.
Kazakhstan Mortgage Company
- Baa3 long-term local currency issuer rating placed on review for possible
downgrade;
- The local currency issuer rating benefits from a very high probability of
systemic support that results in a four-notch uplift from the BCA of 14.
Kazagrofinance
- Baa3 long-term local and foreign currency issuer ratings and P-3 short-
term local and foreign currency issuer ratings placed on review for possible
downgrade;
- The local currency issuer rating benefits from a very high probability of
systemic support that results in a five-notch uplift from the BCA of 15.
Moody's previous rating action on House Construction Saving Bank of
Kazakhstan was on 24 February 2009 when the bank's local currency
deposit rating was downgraded to Baa3 from Baa2;
Moody's previous rating action on Agrarian Credit Corporation was on 24
February 2009 when the company's local and foreign currency issuer ratings
were downgraded to Baa3 from Baa2;
Moody's previous rating action on Development Bank of Kazakhstan was on
24 February 2009 when the issuer rating was downgraded to Baa2 from
Baa1;
Moody's previous rating action on Kazakhstan Mortgage Company was on
24 February 2009 when the local currency issuer rating was downgraded to
Baa3 from Baa1;
Moody's previous rating action on KazAgroFinance was on 24 February 2009
when the local and foreign currency issuer ratings were downgraded to Baa3
from Baa2
The principal methodologies used in rating House Construction Savings
Bank of Kazakhstan are "Bank Financial Strength Ratings: Global
Methodology" and "Incorporation of Joint-Default Analysis into Moody's Bank
Ratings: A Refined Methodology". The principal methodology used in rating
the four GRIs - Agrarian Credit Corporation, Development bank of
Kazakhstan, Kazakhstan Mortgage Company and KazAgroFinance - is "The
Application of Joint-Default Analysis to Government Related Issuers". These
documents can be found at www.moodys.com in the Credit Policy &
Methodologies directory, in the Ratings Methodologies sub-directory Other
methodologies and factors that may have been considered in the process of
rating these issuers can also be found in the Credit Policy & Methodologies
directory.
London
Reynold R. Leegerstee
Managing Director
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
London
Armen L. Dallakyan
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
[2009-05-25]