Fitch assigned IDR at "BB+/"Stable" Outlook to Kazyna Capital Management JSC

21.07.2020
Fitch Ratings assigned Kazyna Capital Management JSC (KCM) long-term issuer default ratings (hereinafter - IDR) in foreign and national currency at "BB+" with a "Stable" Outlook. Fitch has also assigned "AA (kaz)" rating to KCM by the national scale. The rating reflects Fitch's view of KCM's strong ties with the Republic of Kazakhstan ("BBB"/"Stable"/"F2" Outlook). KCM is a private equity fund designed to promote the sustainable development of the national economy and private equity infrastructure in Kazakhstan. The Fund's balance is KZT 190 bln. KCM's activities are focused on non-resource sectors of the economy, such as infrastructure, transport and logistics, energy and technology. Fitch analysts note that when drawing up the rating, they considered the Fund as an organization that is ultimately controlled by the state, as well as other comparable second-tier state-related companies, since KCM contributes to the development of investment infrastructure and promotes the diversification of the economy within the framework of state mandates. According to Fitch, the level of the state's ability and readiness to provide support to KCM is very high. State funding includes both short-term and long-term borrowings, as well as capital contributions, which together accounted for 72% of assets which amounted to KZT 190 bln. at the end of 2019. At the same time, Fitch analysts emphasize the strong socio-political consequences in the event of KCM default, which may temporarily jeopardize the implementation of state programs, as well as measures taken by the state in the past 10 years to develop private equity infrastructure in Kazakhstan. The Fund implements projects from renewable energy to the utility sector, food industry, infrastructure and natural resources. According to Fitch, these projects are of high socio-political significance for the state within the framework of the State Program of Industrial and Innovative Development of the Republic of Kazakhstan. Given the politically sensitive factors, Fitch believes that suspending the provision of services in the event of default of KCM would have significant political consequences for the sovereign issuer itself. Based on Fitch's methodology for rating of state-related companies, KCM is a structure credit-linked with the state, reflecting strong ties with it, since the state is the ultimate (though indirect) 100% owner of KCM, as well as the state's willingness to provide support if necessary. This gives the IDR notched down two levels relative to "BBB" sovereign IDR. Reference: Kazyna Capital Management JSC is a Private Equity Fund established in 2007, whose main mission is to develop private equity infrastructure in Kazakhstan to promote the sustainable economic development of Kazakhstan. It is a subsidiary of Baiterek NMH JSC. For more information, please visit: kcm-kazyna.kz.

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