Mortgage Guarantee Fund of Kazakhstan downgraded to ’BB-/kzA-’; outlook stable
17/09/2009 00:27
Mortgage Guarantee Fund of Kazakhstan downgraded to ’BB-/kzA-’; outlook stable
17/09/2009 00:27
Tashkent, Uzbekistan (UzDaily.com) -- Standard & Poor’s Ratings Services (S&P) said on 16 September that it had lowered its long-term issuer credit and Kazakhstan national scale ratings on Mortgage Guarantee Fund of Kazakhstan (JSC) (MGFK), a specific type of mortgage insurance provider 100% owned by the Republic of Kazakhstan (foreign currency BBB-/Stable/A-3; local currency BBB/Stable/A-3; Kazakhstan national scale ’kzAAA’) to ’BB-’ and ’kzA-’ from ’BB’ and ’kzA’. The outlook is stable.
At the same time, the ratings were removed from CreditWatch, where they had been placed with negative implications on 16 June 2009. Before the CreditWatch placement, the outlook was stable.
"The downgrade and removal from CreditWatch follow our application of our revised methodology for rating government-related entities," said Standard & Poor’s credit analyst Boris Kopeykin.
The ratings reflect S&P expectations of a "moderately high" likelihood of timely and sufficient extraordinary support to MGFK from the Kazakh government in case of financial distress.
The ratings also incorporate MGFK’s weak stand-alone credit profile, which S&P assesses at ’B’. This opinion is based on the company’s short track record, weak and volatile financial position, and limited scale of operations, although it has a lack of debt and a commitment to a policy of "no debt".
In accordance with S&P criteria for government-related entities, the view of a "moderately high" likelihood of extraordinary government support is based on assessment of MGFK’s:
The outlook on MGFK is stable because the outlook on Kazakhstan is stable. S&P expects the government to continue to expand MGFK’s capital in the medium term. Furthermore, S&P does not expect any changes in the policy and regulatory framework that would challenge S&P expectations of a "moderately high" probability of support to MGFK from the government in case of financial distress.
"A negative rating action on Kazakhstan, or a change in our expectations of timely and sufficient extraordinary support to MGFK from the government because of weakening government support, could pressure the ratings," said Mr. Kopeykin.
The rating could also come under pressure should MGFK’s financial position and liquidity deteriorate compared with currently expected levels.
Ratings upside could result from a stronger sovereign credit profile, or a higher probability of extraordinary support.
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