OREANDA-NEWS. On December 18, 2007 Fitch Ratings has affirmed Kazakhstan-based Astana Finance's (AF) Long-term foreign currency Issuer Default rating (IDR) at 'BB+' but revised the Outlook to Negative from Stable. The agency has also affirmed AF's ratings at Long-term local currency IDR 'BB+', senior unsecured debt 'BB+', Short-term foreign currency IDR 'B', National Long-term 'A+(kaz)', Individual 'D/E', Support ?' and Support Rating Floor 'BB+'. The Outlooks for the Long-term local currency IDR and National Long-term rating are Stable, reported the press-centre of KASE.

The rating action follows yesterday's rating action in respect of the Republic of Kazakhstan's sovereign ratings, when the Outlooks for Kazakhstan's Long-term foreign currency IDR ('BBB') and Long-term local currency IDR ('BBB+') were revised to Negative from Stable. AF's Long-term IDRs and senior debt ratings ultimately reflect the moderate potential for support from the Kazakhstan authorities in the event of need. The Outlooks for AF's Long-term local currency IDR (currently three notches below the Kazakhstan sovereign Long-term local currency IDR whereas the Long-term foreign currency IDR is two notches lower) and National rating remain Stable to reflect the anticipated change in AF's 25% shareholder, which is expected to be finalised in Q108.

AF is currently 25%-owned by the municipality of Astana (rated Long-term foreign currency and local currency IDRs 'BBB-' (BBB minus)/ Outlook Stable). In Q108, the municipality's stake is to be transferred to the state-owned Kazyna Fund for Sustainable Development (Kazyna), which owns various development organisations in Kazakhstan, including the Development Bank of Kazakhstan (rated Long-term foreign currency IDR BBB'/Outlook Negative). The transfer will take place, along with an injection of KZT25bn of new equity, in Q108. When it takes over the municipality of Astana's stake, Kazyna will issue a comfort letter in respect of AF's obligations that is similar to existing, strongly worded letters from the Municipality of Astana.

AF's Individual 'D/E' rating reflects its rapid growth, substantial concentrations and very high leverage. Its leverage profile will improve significantly, once it receives the KZT25bn of new equity capital to accompany the shareholder change in Q108.

Near-term liquidity is satisfactory. AF relies on the positive structural mismatch of its balance sheet. AF's predominantly long-term funding is sourced mainly from the local and international debt capital markets and banks. As for other financial institutions in the region, the willingness of the international capital markets to take Kazakhstani financial institution risk contracted sharply in H207, but AF has relatively limited debt and loan repayments before Q109.

AF was created in 1997 by the Municipality of Astana to facilitate development finance (loans, leasing and equity) for Astana, the capital of Kazakhstan, and for the surrounding Akmola region. It has since diversified geographically and into certain aspects of investment banking.