Moody's downgrades FCC (Kazakhstan), Outlook Stable

/Moody's Investors Service, London, December 21, 09, heading by KASE/ - London, 21 December 2009 - Moody's Investors Service has today downgraded the corporate family rating (CFR) and probability of default rating (PDR) of JSC National Company Food Contract Corporation ("FCC") to Ba3 from Ba1. The outlook on the company's CFR is stable. Today's rating action concludes the review on the company's rating initiated on 15 July 2009. The downgrade of FCC's CFR mainly reflects Moody's concerns on the timeliness of ongoing government support despite taking into consideration the decision of the Kazakh government to increase FCC's capital by USD122 million (around KZT18 billion). While Moody's believes this increase should allow FCC to maintain sufficient headroom from March 2010 onwards, the capital increase has yet to materialise. Current ratings also assume Moody's expectation of continuing support from all foreign lending banks, which granted a waiver to FCC's financial covenants until February 2010 to prevent a breach of its covenants in 2009. FCC's Debt/Equity ratio increased as a result of the decision of the Kazakh government to grant a loan to its agency to pre-finance the 2009 grain harvest. The loan increased FCC's reported financial liabilities reducing the headroom under this covenant. The outlook on the company's rating is stable reflecting Moody's expectation that the lending banks and the Kazakh Republic will continue to remain supportive of the company to meet its financial commitments going forward in a timely manner. However, Moody's believes negative pressure on the rating could occur if headroom under the covenants remains limited and/or support from the Kazakh government does not materialise in a timely fashion if needed. The last rating action was implemented on 15 July 2009, when Moody's downgraded to Ba1 from Baa3 the senior unsecured issuer rating of FCC. Concurrently, Moody's withdrew the company's issuer rating and assigned a Ba1 CFR and PDR to the company. All the company's ratings were placed under review for possible downgrade. The principal methodology used in rating FCC is Moody's Rating Methodology for Government-Related Issuers ("GRIs") introduced in June 2005 and updated in July 2006 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. Headquartered in Astana, Kazakhstan, JSC National Company Food Contract Corporation is fully owned by the Kazakh Republic through the National Holding KazAgro. FCC's principal mandate is to maintain state grain reserves at the levels required to supply Kazakhstan and to ensure timely grain replenishment. At the end of December 2008, FCC employed 1,718 people and reported revenues at KZT35 billion, up from KZT24 billion the previous year. Paris Myriam Durand Managing Director Corporate Finance Group Moody's France S.A. JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 London Stefano Del Zompo, CFA Analyst Corporate Finance Group Moody's Investors Service Ltd. JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 [2009-12-22]