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Standard & Poor’s reconsiders Kazakhstan

Ratings

Standard & Poor’s rating agency lowered Kazakhstan’s credit rating from “stable” to “negative” yesterday. The scale of the foreign crediting boom in that country concerns the agency, and it may lower Kazakhstan’s country rating on October 9.

The agency is now assessing Kazakhstan’s readiness to back up the obligations of its state companies, which may also be re-rated. Kazakhstan’s sovereign rating and the ratings of a number of Kazakh organizations, the Development Bank, Kazpochta, the Agrarian Credit Corp. and the Kazakh Mortgage Credit Guarantee Fund have been place on the Standard & Poor’s CreditWatch list.

An S&P spokesman told Kommersant that the corrections would most likely be by a single degree. Kazakhstan’s rating for foreign and domestic currency is now BB/A-3. The agency will also request addition financial information from the Kazakh government. Questions about Kazakhstan’s solvency are linked to the international liquidity crisis.

According to the National Bank of Kazakhstan, the country’s foreign debt as of July 1 of this year was over 101% of the GDP, up from 79.4% a year earlier. The current-account deficit is over 5% of the GDP, and the country’s gold and currency reserves fell from $23.5 billion in July to $20 billion on September 14. Experts note a particularly negative tone in the statement on Kazakhstan. The Fitch and Moody’s rating agencies may follow in S&P’s footsteps in relation to Kazakhstan, and the lowering of its sovereign rating could lead to the outflow of capital from the country. Conflicts between the Kazakh government and the large oil and gas companies in the country are also detrimental to the investment climate. (kommersant.com)

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