OREANDA-NEWS. November 15, 2011. Standard & Poor's Ratings Services said that it raised its foreign currency counterparty credit ratings  on state-owned Development Bank of Kazakhstan to 'BBB+/A-2' from 'BBB/A-3', following the raising of the sovereign foreign currency ratings. At the same time, we affirmed the local currency counterparty credit ratings of 'BBB+/A-2'. The outlook is stable, reported the press-centre of KASE.

The upgrade of the Development Bank of Kazakhstan (DBK) mirrors the upgrade of its ultimate owner, the   (foreign currency, BBB+/Stable/A-2; local currency, BBB+/Stable/A-2; Kazakhstan national scale, kzAAA). The government's shares in DBK are managed by Samruk-Kazyna (foreign currency BBB+/Stable/A-2; local currency BBB+/Stable/A-2; Kazakhstan national scale kzAAA), the government's holding company for over 400 state-owned and government-supported entities.

We equalize the ratings on the Development Bank of Kazakhstan with the ratings on the Republic of Kazakhstan based on our assessment of an "almost certain" likelihood of the government providing timely and extraordinary support sufficient to service all debt, should the need arise in any severe downside scenario. Our assessment of the likelihood of extraordinary support is based on our view of the bank's critical public policy role and its integral link to the government. These assessments reflect the state's 100% ownership and DBK's position as the primary vehicle for providing long-term credit to the nonextractive sectors of the Kazakh economy, the expansion of which is one of the government's main strategic development targets. DBK is to play a key role in the implementation of the government's medium-term strategic development plan. In recent years, it has offset dwindling project financing from nonofficial sources. In view of the substantial development needs in Kazakhstan's infrastructure and manufacturing sectors, we believe DBK will continue to play a vital role.

Although the sovereign does not guarantee DBK's obligations, the bank appears to be well capitalized as a result of continuous government injections. In September 2009, the government increased DBK's capital by 122%, bringing it to 31.7% of total reported assets by year-end 2009. The increase in DBK's capital was a result of both the government's program for industrial and innovation development and its anticrisis program, launched in late 2008. In addition,  DBK obtains other support from the government through budget loans, as well as loans and guarantees (including subordinated loans) on favorable terms from Samruk-Kazyna.