Fitch Affirms Ratings of Development Bank of Kazakhstan & ATFBank
OREANDA-NEWS. June 16, 2009. Fitch Ratings has affirmed the Development Bank of Kazakhstan's (DBK) and ATF Bank's (ATF) Long-term foreign currency Issuer Default Ratings (IDRs) at 'BBB-' and 'BBB' respectively. Fitch has simultaneously removed their ratings from Rating Watch Negative (RWN) and assigned Negative Outlooks. A full rating breakdown is provided at the end of the commentary, reported the press-centre of KASE.
The rating actions follow the recent affirmation of Kazakhstan's Long-term foreign and local currency IDRs at 'BBB-' and 'BBB', respectively (for further information, see the 5 June 2009 comment, entitled 'Fitch Affirms Kazakhstan; Off Rating Watch Negative; Assigns Negative Outlook', which is available on the agency's public website, www.fitchratings.com).
DBK is indirectly owned by the Kazakhstan government (100%-owned by the government-owned National Welfare Fund Samruk-Kazyna) and is key to the government's strategic development efforts. As such, and given the authorities' ability to provide support, Fitch believes that there is a high probability of state support, if required. The Negative Outlooks assigned to DBK's Long-term foreign and local currency IDRs reflect the Negative Outlooks on the corresponding ratings of the sovereign.
ATF Bank's IDRs and Support Rating are driven by potential support from UniCredito Italiano (UCI, rated 'A'/'F1'/Negative). Given UCI's ability and propensity to provide support, Fitch believes there is a high probability that support would be forthcoming, if required. ATF's Individual Rating reflects the bank's rapidly weakening asset quality and its potential further deterioration due to high borrower concentrations and its exposure to the construction/real estate sectors, as well as the increasingly challenging credit environment. In addition, Fitch notes ATF's moderate loss absorption capacity and capitalization relative to the bank's risk profile. However, the agency also takes into account recent improvements in risk management and access to funding following ATF's acquisition by UCI.
At the same time, the Long-term IDR of 'BB+' of Kazakh development finance institution Kazagrofinance (KAF) remains on RWN. KAF's ratings are driven by the potential of government support, in case of need, given its ownership and the national importance of the agriculture industry in Kazakhstan. Fitch will resolve the RWN after reassessing the likelihood of government support for KAF in light of the recent defaults of other companies in the financial
sector, namely BTA Bank, Alliance Bank and Astana Finance, of which are rated 'RD' (Restricted Default).
The rating actions are as follows:
Development Bank of Kazakhstan
Long-term foreign currency IDR: affirmed at 'BBB-'; removed from RWN; assigned a Negative Outlook
Long-term local currency IDR: affirmed at 'BBB'; removed from RWN, assigned a Negative Outlook
Short-term foreign currency IDR: affirmed at 'F3'; removed from RWN
Short-term local currency IDR: affirmed at 'F3'
Support Rating: affirmed at '2'; removed from RWN
Support Rating Floor: affirmed at 'BBB-'; removed from RWN
Senior unsecured debt: affirmed at 'BBB-'; removed from RWN
ATF Bank
Long-term foreign currency IDR: affirmed at 'BBB'; removed from RWN, assigned a Negative Outlook
Short-term foreign currency IDR: affirmed at 'F3'
Support Rating: affirmed at '2'
Individual Rating: affirmed at 'D/E'
Senior unsecured debt: affirmed at 'BBB'; removed from RWN
KAF's present ratings are as follows:
KazAgroFinance
Long-term foreign currency IDR: 'BB+'; RWN
Long-term local currency IDR: 'BBB-'; RWN
Short-term foreign currency IDR: 'B'
National Long-term rating: 'AA(kaz)'; Outlook Stable
Support Rating: '3'
Support Rating Floor: 'BB+'; RWN
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