Fitch affirms Temir Zholy

Fitch Ratings said is affirmed Kazakhstan Temir Zholy's BBB issuer default and foreign currency senior unsecured ratings. The outlook is stable.

Fitch said the ratings reflect Temir Zholy's links with the state, including the strategic nature of Kazakhstan's rail infrastructure to its economy, the importance of the commodities transported, the government's intention to retain the rail infrastructure assets and activities within Temir Zholy during the reform process, the government's 100% ownership of the company and the government's involvement in the group's finances given the state's role in setting tariffs.

The company is not aggressively leveraged, the agency noted. Recent short-term bank funding has increased the amount of secured debt, but this was some $154 million at the end of 2005. Other recent funding has been spent on replacing the largely non-operational wagon fleet, refurbishing locomotives and on rail infrastructure. A prospective unsecured bond is expected to refinance short-term funding and provide funds for future capital expenditure requirements, the agency said.

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