Standard & Poor's affirmed Development Bank of Kazakhstan "BBB-" LT Rtgs

/Standard & Poor's, July 26, 05/ - Standard & Poor's Ratings Services said today it affirmed its 'BBB-' long-term foreign and local currency issuer credit ratings on the Development Bank of Kazakhstan (DBK). At the same time, the 'A-3' short-term foreign and local currency ratings on DBK were affirmed. The outlook is stable. The ratings on DBK reflect the Bank's strong financial profile, its clearly defined and strategic public policy role assigned by the government of the Republic of Kazakhstan (foreign currency BBB-/Stable/A-3; local currency BBB/Stable/A-3). DBK's 100% state ownership also ensures strong implicit sovereign support. "DBK is the primary vehicle in providing long-term credit to the nonextractive sectors of the Kazakh economy, and the expansion of these sectors is one of the main strategic development targets of the government," said Standard & Poor's credit analyst Luc Marchand. "The sovereign maintains an arm's- length relationship with DBK and does not guarantee the bank's obligations, although it keeps the Bank well capitalized relative to the size of its business." In 2005, the government reaffirmed its support for the bank by increasing DBK's capital by KZT15.0 billion. The increase in DBK's capital is an integral part of the first stage of the government's 2003-2015 strategic development program. The authorities are also closely involved in defining DBK's strategy, as well as controlling the Bank through the board of directors. In view of the substantial development needs in Kazakhstan's infrastructure and manufacturing sectors, DBK has a vital role to play for many years to come. Total assets amounted to KZT99.6 billion at year-end 2004. Loan commitments have been built up since the inception of the Bank, and at year-end 2004, DBK had a portfolio of disbursed investment projects and export operation loans with a total volume of KZT40.3 billion. The Bank is expected to expand its loan portfolio prudently in a high-risk market environment. "We expect that government support will remain strong, as demonstrated by past capital increases and the expected expansion of the Bank's capital and budgetary loans," said Mr. Marchand. For the foreseeable future, no changes are expected in the policy and regulatory framework that would weaken the Bank's key policy role in the government's development plans. Nevertheless, a deviation from DBK's policy role, or signs of weakening government support, would result in downward pressure on the ratings. For detailed information apply: Luc Marchand, London, 44 (207) 176-71-11 Farouk Soussa, London, 44 (207) 176-71-04; Analysts' e-mails: luc_marchand@standardandpoors.com farouk_soussa@standardandpoors.com sovereignlondon@standardandpoors.com Ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. It can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20- 7176-7176; London Press Office Hotline (44) 20-7176-3605; Paris (33) 1- 4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5916. [2005-07-26]