S&P downgrades credit ratings of Development Bank of Kazakhstan To "BBB-/A-3", outlook negative

/Standard & Poor's, Moscow, February 24, 16, KASE heading/ Standard & Poor's Ratings Services lowered its long- and short-term issuer credit ratings on Development Bank of Kazakhstan to 'BBB-/A-3' from 'BBB/A-2'. The outlook on the long-term rating is negative. We also lowered our Kazakhstan national scale rating on DBK to 'kzAA' from 'kzAA+'. The rating action reflects the downgrade of Kazakhstan on Feb. 17 (see "Kazakhstan Downgraded To 'BBB-/A-3' On Weaker Growth Outlook And Falling Current Account Receipts; Outlook Negative," published on RatingsDirect). We rate DBK under our criteria, "Group Rating Methodology" and "Rating Government-Related Entities: Methodology And Assumptions." We equalize the ratings on DBK with those on Kazakhstan as we believe there is an almost certain likelihood that the government will provide timely and extraordinary support to the institution in a potential stress scenario. Our view of the likelihood of extraordinary government support is based on: DBK's integral link with the government of Kazakhstan, which fully owns DBK through National Management Holding Baiterek. DBK was established in 2001 by a Presidential Decree, and it has special public status as a national development institution under the Law On Development Bank of Kazakhstan. DBK does not have a banking license and is not required to comply with prudential regulations applicable to commercial banks. DBK's critical role as the primary institution mandated to implement the government's economic diversification and industrialization agenda. DBK provides long-term credit to the non-extractive sectors of the economy, particularly the industrial and manufacturing sectors. DBK is the key financial operator of the government's five-year State Program of Industrial and Innovative Development (SPIID) 2015-2019. In our view, DBK will also remain a core institution within the Baiterek Group, accounting for