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TEXT-S&P summary: Kazakhstan Temir Zholy
November 14, 2012 / 12:21 PM / 5 years ago

TEXT-S&P summary: Kazakhstan Temir Zholy

(The following statement was released by the rating agency)

Nov 14 -

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Summary analysis -- Kazakhstan Temir Zholy ------------------------ 14-Nov-2012

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CREDIT RATING: BBB-/Stable/-- Country: Kazakhstan

Primary SIC: Railroads

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Credit Rating History:

Local currency Foreign currency

24-Dec-2010 BBB-/-- BBB-/--

03-Nov-2003 BB+/-- BB+/--

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Rationale

The rating on Kazakhstan’s national railway operator Kazakhstan Temir Zholy (KTZ) reflects Standard & Poor’s Ratings Services’ opinion that there is a “very high” likelihood that the Republic of Kazakhstan (foreign and local currency BBB+/Stable/A-2; Kazakhstan national scale kzAAA/--/--) would provide timely and sufficient extraordinary support to KTZ in the event of financial distress. Our rating on KTZ is three notches above its stand-alone credit profile (SACP) of ‘bb-'.

We consider KTZ to be a government-related entity (GRE). In accordance with our criteria for GREs, our view of a “very high” likelihood of extraordinary government support is based on our assessment of KTZ‘s:

-- “Very important” role in Kazakhstan’s economy as a national railroad company. KTZ plays a key role in land-locked Kazakhstan’s vital national transport sector; and

-- “Very strong” link with the Kazakh government, which fully owns KTZ indirectly via sovereign wealth fund Samruk-Kazyna (BBB+/Stable/A-2), and provides ongoing financial support and monitoring. We do not foresee any privatization risk in the near to medium term.

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