Moody’s assigns B2 rating to Kazkommertsbank’s notes; outlook negative
May 17. The FINANCIAL
Moody’s Investors Service has today assigned (P)B2 senior unsecured debt rating to Kazkommertsbank’s USD2 billion medium-term notes programme.
At the same time, Moody’s assigned a B2 long-term foreign-currency senior unsecured debt rating to the first drawdown of USD300 million. The notes have a seven-year maturity. The outlook on the programme and the issued senior unsecured notes is negative, in line with the negative outlook on the bank’s debt ratings.
Moody’s says that the B2 rating assigned to the notes is based on the fundamental credit quality of Kazkommertsbank, reflected by its E+ bank financial strength rating (BFSR), mapping to B2 on the long-term rating scale. Moody’s assumes no systemic support probability for the bank’s debt ratings and consequently there is no notching uplift for the ratings on the senior unsecured notes.
The bank’s BFSR is constrained by the risks associated with its weak asset quality, stemming from the difficult economic conditions in Kazakhstan and exacerbated by the high borrower and industry concentrations in the bank’s loan portfolio. However, the rating is underpinned by its leading market position as the largest bank in Kazakhstan in terms of total assets and deposits.
According to the terms and conditions of the notes, Kazkommertsbank must comply with several covenants, including negative-pledge covenants, limitations on mergers, disposals and dividend payments.
Moody’s most recent rating action on Kazkommertsbank was implemented on 21 October 2010 when the bank’s foreign-currency senior unsecured debt rating was downgraded to B2 from Ba3 and foreign-currency subordinated debt rating was downgraded to B3 from B1. The principal methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody’s Bank Ratings: A
Refined Methodology published in March 2007.
Headquartered in Almaty, Kazakhstan, Kazkommertsbank reported total consolidated assets and total capital of USD18.2 billion and USD2.8 billion, respectively, in accordance with IFRS, as of year-end 2010.