S&P Removed Kazpost Off Negative CreditWatch On "High" Likelihood Of State Support
16.09.09 17:04
/Standard & Poor's, Moscow, September 16, 09/ - Kazakh Postal Provider
Kazpost Off Watch On "High" Likelihood Of State Support; Affirmed At 'BB/kzA+';
Outlook Stable.
- We expect Kazpost will continue to benefit from a "high" probability of
support from the Kazakh government.
- We are affirming our 'BB' long-term issuer credit and 'kzA+' Kazakhstan
national scale ratings and removing them from CreditWatch with negative
implications.
- The outlook is stable.
- We continue to see Kazpost's stand-alone credit quality at the 'B' level.
Standard & Poor's Ratings Services said today that it had affirmed its 'BB'
long-term issuer credit and 'kzA+' Kazakhstan national scale ratings on
Kazpost (JSC), the state-owned national postal operator in Kazakhstan.
The outlook is stable.
The ratings were removed from CreditWatch with negative implications, where
they had been placed on June 16, 2009. Before the CreditWatch placement, the
outlook was stable.
"The removal from CreditWatch and affirmation reflect our expectations of a
"high" likelihood that the Kazakh government will provide timely and sufficient
extraordinary support to the company in case of financial distress," said
Standard & Poor's credit analyst Boris Kopeykin.
The ratings continue to be constrained by Kazpost's plans to increase its
unguaranteed debt and its rising reliance on its own funds to finance its
massive capital-investment program.
In accordance with our criteria for government-related entities, our view of a
"high" likelihood of extraordinary government support is based on our assessment
of Kazpost's:
- "Important role" as a mail delivery and pension payments provider for the
government. Kazpost provides about 50% of national mail services and
delivers more than 45% of pensions and social assistance payments in the
country. Kazpost has a near-monopoly in rural areas (where 43% of
Kazakhstan's population lives) with its 3,500 outlets including 2,900 outlets
in rural areas. As the national postal operator, Kazpost must provide
universal mail services throughout Kazakhstan and is the exclusive deliverer
of high-value or top-secret goods for the Kazakh government. The company also
participates in various state programs, including an e-government project,
and manages the issuance of postage stamps. We also base this opinion on
the track record of support to Kazpost in the form of recurring capital
injections.
- "Very strong" link with Kazakhstan's government. Kazakhstan's government
wholly owns Kazpost through Samruk-Kazyna holding, and privatization is
not on the agenda. The government tightly monitors Kazpost's activities
through Samruk-Kazyna. The only outstanding loan that Kazpost currently
has is guaranteed by the government, although the government does not
plan to guarantee the company's future borrowings.
The stable outlook on Kazpost mirrors that on the Republic of Kazakhstan
(foreign currency BBB-/Stable/A-3; local currency BBB/Stable/A-3; Kazakhstan
national scale rating 'kzAAA'). We expect the government to continue to expand
Kazpost's capital, although the exact amount of injections for 2010-2012 might
fluctuate. Furthermore, we do not expect any changes in the policy and
regulatory framework that would challenge our expectations of a "high"
probability of timely and sufficient support to Kazpost from the government
in case of financial distress.
"A negative rating action on Kazakhstan, or a change in our expectations of
extraordinary support to the company could pressure the ratings on Kazpost,"
said Mr. Kopeykin.
A faster-than-now-expected accumulation of unguaranteed debt, or lower-than-
now-planned financial results could also result in ratings downside.
Ratings upside could result from a stronger sovereign credit profile, and/or a
higher probability of extraordinary support, which we do not currently expect.
An upgrade might also follow a strengthening of the company's stand-alone credit
profile, including higher ongoing support from the government in the form of
capital injections and consequently lower-than-now-expected borrowings in 2009-
2012.
RELATED RESEARCH
Enhanced Methodology And Assumptions For Rating Government-Related
Entities, June 29, 2009
Principles Of Corporate And Government Ratings, June 26, 2007
Primary Credit Analyst:
Boris Kopeykin, Moscow, (7) 495-783-4062;
boris_kopeykin@standardandpoors.com
Secondary Credit Analysts:
Felix Ejgel, Moscow, (7) 495-783-4060;
felix_ejgel@standardandpoors.com
Andrey Nikolaev, CFA, Moscow, (7) 495-783-4131;
andrey_nikolaev@standardandpoors.com
Additional Contact:
International Public Finance Ratings Europe;
PublicFinanceEurope@standardandpoors.com
[2009-09-16]