Moody's may upgrade Kazakhstan

Moody's Investors Service said it placed the Republic of Kazakhstan's Baa3 foreign-currency country ceiling for bonds and its Baa3 rating for foreign-currency government bonds under review for possible upgrade. The agency also changed the outlook on the Republic's Baa1 local-currency bond rating and the Ba1 foreign-currency ceiling for bank deposits to stable from positive.

The agency said the review follows six years of strong economic growth that, coupled with prudent macroeconomic policies, have yielded substantial growth of foreign-currency reserves and strengthened considerably the country's ability to pay its small foreign-currency government debt. Official foreign-exchange reserves plus those reserves held in the National Fund for the Republic of Kazakhstan have grown to 23% of GDP from 13% for 2001 through 2005, while foreign-currency government debt has dropped to 3% of GDP from 15%.

At the same time, there has been a rapid credit expansion and a substantial increase in foreign-currency borrowing by the banking system. Moody's said that given the extremely rapid increase in domestic credit since 2004, it is possible that under adverse economic conditions, there could be an outsized deterioration in the banking system's asset quality that would represent a contingent claim on the government.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.