Moody's lowers Kazkommertsbank

Moody's Investors Service said it downgraded Kazkommertsbank's senior unsecured debt in foreign-currency to Baa2/P-2 from Baa1/P-2, foreign-currency backed subordinated debt to Baa3 from Baa2 and foreign-currency backed junior subordinated debt to Ba1 from Baa3.

The bank financial strength rating is affirmed at D.

The outlook is changed to negative.

Moody's also affirmed the issuer's foreign-currency deposit ratings at Ba1/NP with a stable outlook. The action ends the review that began May 4 following the implementation of Moody's amended bank rating methodology.

The downgrade of foreign-currency debt ratings reflects Moody's assessment of systemic support levels for banks in Kazakhstan using its low country support guideline. The bank's deposit and debt ratings incorporate its Ba2 baseline credit assessment and Moody's assessment of the probability of systemic support as the largest bank in Kazakhstan.

The negative outlook reflects the agency's concerns that the rapid lending expansion and large loan portfolio concentrations could result in material deterioration of asset quality. Other major risk factors are Kazkommertsbank's large real estate and construction exposure and its high dependence on international debt market.

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