Standard & Poor's Ratings Services said today it affirmed its 'BBB+' long-term and 'A-2' short-term issuer credit ratings on Kazakhstan-based Eurasian Development Bank (EDB), despite the recent CreditWatch action on the sovereign. The outlook is stable. At the same time, Standard & Poor's affirmed its 'ruAAA' and 'kzAAA' national scale ratings on EDB.
"Standard & Poor's regards EDB as a supranational institution and its credit standing is therefore not constrained by the lowest rating of its sovereign members," said Standard & Poor's credit analyst Sladana Tepic. "Instead, the bank's financial strength and shareholder support continue to be dominant factors in assessing its creditworthiness. As a result, the ratings on EDB are unaffected by the CreditWatch placement with negative implications on Oct. 2, 2007, of the Republic of Kazakhstan, EDB's host country and minority owner. Therefore, a possible lowering of the ratings on Kazakhstan following the resolution of the CreditWatch action would also leave EDB's ratings unaffected.
For more details of the CreditWatch placement on Kazakhstan (foreign currency BBB/Watch Neg/A-3, local currency BBB+/Watch Neg/A-2), see article titled "Republic Of Kazakhstan And Govt Subs On Watch Neg Pending External Financing Risk Assessment," published Oct. 2, 2007, on RatingsDirect.
The ratings on EDB remain supported by its initial strong capitalization and expected support from majority shareholder, The Russian Federation (foreign currency BBB+/Stable/A-2, local currency A-/Stable/A-2, national scale rating ruAAA).
"The ratings on EDB could be raised if there is evidence that it is successfully executing its mandate, as well as receiving continued shareholder support," added Ms. Tepic. "Equally, EDB's credit standing could improve if the ratings on its main shareholder were to be raised. On the other hand, poor financial performance by the bank or signs of weakening majority shareholder creditworthiness or support would create downward pressure on the ratings."
