Fitch affirms long-term default rating of National managing holding KazAgro at "BВВ", outlook stable

/Fitch Ratings, Moscow, April 29, 15, KASE heading/ – Fitch Ratings has affirmed KazAgro National Managing Holding JSC's (KazAgro) Long-term foreign currency Issuer Default Rating (IDR) at 'BBB' and its Long-term local currency IDR at 'BBB+'. The agency has also affirmed KazAgro's Short-term foreign currency IDR at 'F3'. The Outlooks for the Long-term ratings are Stable. Fitch has also affirmed KazAgro's outstanding senior unsecured eurobonds at Long-term foreign currency rating 'BBB' and domestic bonds at Long-term local currency rating 'BBB+'. KEY RATING DRIVERS The affirmation reflects KazAgro's 100% state ownership, its strategic importance as a conduit of state policy to support the national agricultural sector, and hence a high probability of timely potential support from the sovereign, in case of need. Fitch used its public sector entities methodology and applied a top-down approach in its analysis of KazAgro and applied a one notch rating differential from Kazakhstan's ratings (BBB+/A-/Stable). As Fitch previously noted, a reduction in state-originated funding to less than 50% of KazAgro's total funding would lead to a widening of the rating differential between the company and the sovereign to two notches. According to interim financial information market funding as a share of KazAgro group's funding structure was 46% in 1Q15, down from 49% in May 2014. Fitch expects KazAgro to maintain state-originated funding at a majority share of more than 50% in 2015-2016. To this end, KazAgro is likely to issue up to KZT80bn domestic bonds (of which KZT20bn were issued in February 2015) this year. Additionally, KazAgro could be supported by capital injections from the state. In May 2014 the government injected KZT20bn into KazAgro's equity to cover the company's loss stemming from a depreciation of tenge in February 2014. KazAgro group's debt stock in 2014 comprised 38% bonds and loans denom