S&P: Kazakhstan on watch

Standard & Poor's said it placed the Republic of Kazakhstan's BBB/A-3 sovereign foreign currency ratings and BBB+/A-2 sovereign local currency ratings on CreditWatch with negative implications.

This follows growing concern about the more adverse international financial environment, which affects Kazakhstan through the very substantial external financing needs of the domestic banking system, the agency said.

S&P noted that net external debt of the financial system rose from 15% of current account receipts at year-end 2003 to a projected 58% at year-end 2007, financing an unprecedented domestic credit boom.

Tighter liquidity conditions will contribute to an expected significant slowdown of credit growth, reducing the overall speed at which the economy expands and potentially compromising asset quality in the future, the agency said.

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