OREANDA-NEWS. May 25, 2009. Fitch Ratings has downgraded Kazakhstan-based JSC Astana Finance's (AF) Long-term Issuer Default Ratings (IDR) to 'RD' (Restricted Default) from CCC', thereby resolving the Watch Negative (RWN) on the ratings. The agency has also downgraded JSC Astana Finance Leasing (AFL), a subsidiary  of AF, to 'C' from 'CCC'. A full list of rating actions is provided at the end of this commentary, reported the press-centre of KASE.

The downgrade follows AF's announcement yesterday that it has decided to suspend payments of interest and principal on its international obligations and to suspend principal payments on certain of its domestic obligations until it agrees and implements a restructuring of these obligations. AF's IDRs will remain on 'RD' until it has completed the expected restructuring of its outstanding debt and, in Fitch's opinion, is able to comply with new terms negotiated with its creditors, which may still follow receipt of financial support from the Kazakh authorities.

Fitch understands that AFL has so far not defaulted on any of its obligations, and hence its ratings have not been downgraded to 'RD'. However, AFL's 'C' Long-term IDR reflects the now very high probability that it will end up in default on guarantees it has made in respect of certain AF borrowings (for example the public bonds issued by Astana Finance BV) or be forced into some form of wider coercive debt exchange or restructuring of its liabilities.

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.