Development Bank of Kazakhstan's upcoming issue under Euro MTN program assigned 'BBB-' rating
06.03.06 22:04
/Standard & Poor's, London, March 06, 06/ - Standard & Poor's Ratings
Services said today it assigned its 'BBB-' senior unsecured debt rating to
Development Bank of Kazakhstan's (DBK; BBB-/Stable/A-3) upcoming
issuance under its enlarged $1 billion Euro MTN (EMTN) program (increased
from the $400 million launched in 2002).
The ratings on DBK reflect the Bank's clearly defined public policy role for
the government of the Republic of Kazakhstan (foreign currency BBB-
/Stable/A-3; local currency BBB/Stable/A-3) and 100% public sector
ownership, which ensure strong implicit state support.
"DBK's conservative leverage policies, and the lack of alternative domestic
suppliers of long-term credit to the Kazakh economy, also support the
ratings," 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. The authorities are also closely involved in
defining DBK's strategy, as well as controlling the Bank through its 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 increased by more than 40% to KZT139.8 billion (just
below $1 billion) at year-end 2005, mainly reflecting the increases in the
Bank's equity capital provided by the government and increasing bond
issues. Loan commitments have been built up since the inception of the
bank, and at year-end 2005, DBK had a portfolio of disbursed investment
projects and export operation loans with a total volume of $357.6 million. The
Bank is expected to expand its loan portfolio prudently in a high-risk market
environment. Although DBK's Memorandum on Credit Policy limits total
liabilities to 600% of the bank's capital, management policies have capped
the bank's leverage at a borrowed funds-to-capital ratio of 200%.
"We believe that government support will remain strong, as demonstrated by
past capital increases and the expected further rise in the Bank's capital,"
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) 20-7176-7111;
luc_marchand@standardandpoors.com
Farouk Soussa, PhD., London (44) 20-7176-7104;
farouk_soussa@standardandpoors.com
[2006-03-06]