Moody's assigns rating to Kazakhstan’s forthcoming Eurobonds at 'Bаа3'
20.09.19 16:11
/Moody's Investors Service, Singapore, September 19, 2019, translation and heading
by KASE/ – has assigned a rating of Baa3 to the proposed senior unsecured, euro-
denominated notes to be issued by the Government of Kazakhstan under its
multicurrency USD10 billion medium-term note programme. The notes will rank pari
passu with all of the Government of Kazakhstan's current and future senior
unsecured external debt. The proceeds of the notes are intended for general
budgetary purposes.
The rating mirrors the Government of Kazakhstan's long-term issuer rating of Baa3
with a positive outlook.
Below is the original text of Moody's statement in English.
Moody's Investors Service ("Moody's") has assigned a rating of Baa3 to the
proposed senior unsecured, euro-denominated notes to be issued by the Government
of Kazakhstan under its multicurrency USD10 billion medium-term note programme.
The notes will rank pari passu with all of the Government of Kazakhstan's current
and future senior unsecured external debt. The proceeds of the notes are intended
for general budgetary purposes.
The rating mirrors the Government of Kazakhstan's long-term issuer rating of Baa3
with a positive outlook.
RATINGS RATIONALE
Kazakhstan's Baa3 rating is supported by a very low level of public debt, very
high debt affordability, and sizeable fiscal reserves held in foreign-currency
assets, which provide a significant buffer against external shocks. These credit
strengths are balanced by the country's relatively limited economic diversification,
low – albeit improving – institutional strength, ongoing banking sector fragilities
and longer-term political transition risks.
The outlook on Kazakhstan's rating is positive. The positive outlook reflects
Moody's assessment that economic resilience in Kazakhstan is increasing, supported
by robust growth prospects in both hydrocarbon and non-hydrocarbon sectors, and
rising incomes. Prospects for further economic reforms, combined with prudent and
effective management of fiscal buffers, indicate that Kazakhstan's credit metrics
may strengthen further to be consistent with a higher rating.
WHAT COULD MOVE THE RATING UP/DOWN
The rating would likely be upgraded if ongoing and further reforms were to
strengthen the institutional framework, policy credibility and effectiveness,
and economic competitiveness beyond Moody's current expectations. In particular,
reforms that materially advance economic diversification would enhance the
economy's resilience to potential shocks. Moreover, a material reduction in
banking sector risks, supported by prospects of a sustained improvement in banking
system health, more effective credit intermediation, and enhancements to the
sector's regulation and supervision would likely put upward pressure on the rating.
The positive outlook signals that a rating downgrade is unlikely over the near
term. The outlook would likely be changed to stable if the potential for a
significant and long-lasting deterioration in Kazakhstan's economic and fiscal
metrics were to become likely, possibly stemming from a large, negative oil
price shock that the government were unable to cushion. Reemergence of domestic
political risks, with a negative impact on the government's reform agenda and
the business environment, would also likely put downward pressure on the rating.
This credit rating and any associated review or outlook has been assigned on an
anticipated/subsequent basis. Please see the most recent credit rating announcement
posted on the issuer's page on www.moodys.com, under the research tab, for related
economic statistics included in rating announcements published after June 3, 2013.
This credit rating and any associated review or outlook has been assigned on an
anticipated/subsequent basis. Please see the most recent credit rating announcement
posted on the issuer's page on www.moodys.com, under the research tab, for related
summary rating committee minutes included in rating announcements published after
June 3, 2013.
The principal methodology used in these ratings was Sovereign Bond Ratings
published in November 2018. Please see the Rating Methodologies page on
www.moodys.com for a copy of this methodology.
The weighting of all rating factors is described in the methodology used in this
credit rating action, if applicable.
REGULATORY DISCLOSURES
For ratings issued on a program, series, category/class of debt or security this
announcement provides certain regulatory disclosures in relation to each rating
of a subsequently issued bond or note of the same series, category/class of debt,
security or pursuant to a program for which the ratings are derived exclusively
from existing ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain regulatory
disclosures in relation to the credit rating action on the support provider and
in relation to each particular credit rating action for securities that derive
their credit ratings from the support provider's credit rating. For provisional
ratings, this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive rating that
may be assigned subsequent to the final issuance of the debt, in each case where
the transaction structure and terms have not changed prior to the assignment of
the definitive rating in a manner that would have affected the rating. For
further information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support
from the primary entity(ies) of this credit rating action, and whose ratings
may change as a result of this credit rating action, the associated regulatory
disclosures will be those of the guarantor entity. Exceptions to this approach
exist for the following disclosures, if applicable to jurisdiction: Ancillary
Services, Disclosure to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit rating
and, if applicable, the related rating outlook or rating review.
Please see www.moodys.com for any updates on changes to the lead rating analyst
and to the Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for
additional regulatory disclosures for each credit rating.
* Full version of the press release is posted on Moody's website.
[2019-09-20]