/Standard & Poor's, Moscow, December 24, 10, KASE headline/ - Standard & Poor's Ratings Services said today it raised the ratings on several Kazakhstan-based government-related entities and their subsidiaries following our upgrade on the Republic of Kazakhstan (foreign currency BBB/Stable/A-3, local currency BBB+/Stable/A-2; nation kzAAA). For further details see "Republic of Kazakhstan FC And LC Long-Term Ratings Raised By One Notch To 'BBB' and 'BBB+'; Outlook Remains Stable", published on Dec. 23, 2010 on RatingsDirect.

The rating actions are based on our methodology for government-related entities.

We raised the long-term corporate credit ratings on railway company Kazakhstan Temir Zholy (KTZ) to 'BBB-' from 'BB+', reflecting our expectation of "very high" likelihood of extraordinary government support. Our assessment of KTZ's stand-alone credit quality remains at "b+". We also raised the rating on KTZ's 100% owned subsidiary, JSC Kaztemirtrans (KTT) to 'BBB-' because we continue to equalize it with the ratings on the parent. We revised the outlook on these entities to stable from positive. At the same time, we raised the Kazakh national scale ratings on KTZ and KTT to 'kzAA' from 'kzAA-'.

We also raised the rating on the oil & gas group JSC NC KazMunayGas (KMG) to BBB-' from 'BB+', based on our expectation of "extremely high" likelihood of extraordinary government support and our assessment of stand-alone credit quality at 'b'. The national scale rating was raised to 'kzAA' from 'kzAA-'. The outlook remains stable.

Meanwhile the "4" recovery ratings on KMG, KTT, and KTZ have been withdrawn because Standard & Poor's does not assign recovery ratings to Kazakhstan-based issuers rated 'BBB-' and higher.

Following the action on the parent, we raised the ratings on KMG's 100% owned gas transportation subsidiary KazTransGas (KTG) to 'BB' from 'BB-'. This remains two notches below the parent. The outlook is stable.

The ratings on KMG's subsidiaries, 60% owned oil company JSC KazMunaiGas Exploration Production (KMGEP) and 100% owned oil pipeline KazTransOil (KTO), were affirmed at 'BB+', one notch below the parent, both with a stable outlook.

We consider KMGEP and KTO to be more strategically important for the group and to have a relatively higher stand-alone credit quality than KTG, hence the difference between the ratings on the subsidiaries. Still, the ratings on the subsidiaries remain below those of the parent because their link with the state is indirect and, in our view, the benefits of potential extraordinary state support may not fully filter through to them given KMG's relatively weak stand-alone credit quality and high debt.

We have left unchanged the ratings and the outlook on the postal operator Kazpost (JSC) (foreign and local currency ratings BB/Stable/--, national scale rating kzA+, on Kazakh Agrarian Credit Corp. (BB/Stable/B, kzA+), and on Kazakhtelecom (JSC) (BB/Stable/--; kzA), and on Kazakhstan Electricity Grid Operating Co. (JSC) (KEGOC; BB+/Stable/--).

We continue to assess the likelihood of extraordinary state support as "very high" for KEGOC, "high" for Kazpost and Kazakh Agrarian Corporation, and "moderately high" for Kazakhtelecom. We assess the stand-alone credit quality on KEGOC, Kazpost, and Kazakh Agrarian Corporation at 'b' and for Kazakhtelecom at 'bb-'. Under our methodology for government-related entities, the upgrade of the sovereign rating does not trigger any automatic rating actions on these four entities, as our assessments of their stand-alone credit quality or likelihood of extraordinary state support remain unchanged.

KTZ, KEGOC, KMG, Kazpost and Kazakhtelecom are effectively 100% owned by the government of Kazakhstan through the holding company Samruk-Kazyna. We analyze these entities based on our methodology for government-related entities rather than for parent-subsidiary links, because we expect these entities to benefit from a certain degree of extraordinary state support, and we currently view Samruk-Kazyna as effectively an extension of the government.

Rating List

Rating Upgraded

To From

Kazakhstan Temir Zholy

JSC Kaztemirtrans Issuer credit rating BBB-/Stable/- BB+/Positive/- Kazakhstan national scale kzAA kzAA-

JSC NC KazMunayGas Issuer credit rating BBB-/Stable/- BB+/Stable/- Kazakhstan national scale kzAA kzAA-

KazTransGas Issuer credit rating BB/Stable/- BB-/Stable/-

Ratings Withdrawn

To From

Kazakhstan Temir Zholy JSC Kaztemirtrans JSC NC KazMunayGas Rating of expected debt recovery after default Rating withdrawn 4

Ratings Affirmed

JSC KazMunaiGas Exploration Production

KazTransOil Issuer credit rating BB+/Stable/-

Ratings unchanged JSC Kazpost Issuer credit rating BB/Stable/- Kazakhstan national scale kzA+

Kazakh Agrarian Credit Corp. Issuer credit rating BB/Stable/B;
Kazakhstan national scale kzA+

JSC Kazakhtelecom Issuer credit rating BB/Stable/-;
Kazakhstan national scale kzA

JSC Kazakhstan Electricity Grid Operating Co. Issuer credit rating BB+/ Stable/-

* This list does not include all ratings affected.

Analysts' contacts: Elena Anankina, Moscow, +7 495 783 4130;
elena_anankina@standardandpoors.com Sergei Gorin, Moscow, +7 495 783 4132;
sergei_gorin@standardandpoors.com Etai Rappel, Tel Aviv (1) 922 3 753 9718;
etai_rappel@standardandpoors.com Andreas Kindahl, Stockholm, (46) 8 440 5907;
andreas_kindahl@standardandpoors.com Lidia Polakovic, London, (44) 20 7176 3985;
lidia_polakovic@standardandpoors.com Industrial Ratings Europe;
CorporateFinanceEurope@standardandpoors.com Infrastructure Finance Ratings Europe;
InfrastructureEurope@standardandpoors.com

[2010-12-27]