August 13, 2007 | Cbonds
|Standard & Poor's Ratings Services said that it affirmed its 'BB' long-term credit and 'kzA+' Kazakhstan national scale ratings on the Mortgage Guarantee Fund of Kazakhstan (JSC) (MGFK), located in the Republic of Kazakhstan (foreign currency BBB/Stable/A-3; local currency BBB+/Stable/A-2; Kazakhstan national scale 'kzAAA'). The outlook remains positive.|
"The rating reflects MGFK's very short track record and our concerns about the long-term sustainability of the entity's current public policy role," said Standard & Poor's credit analyst Felix Ejgel. "The company's weak financial performance, stemming from the need to increase personnel spending to keep up with the labor market, and volatile returns on investments also constrain the rating."
The support MGFK receives from the Kazakh government, sound liquidity, and current absence of debt soften rating constraints.
The company has no debt, and at Jan. 1, 2007, its cash reserves reached KZT2.9 billion (about 12% of the amount of insured loans).
"We expect the government to enhance its ongoing financial support to MGFK in the next few months in an updated government program," said Mr. Ejgel. "The outlook also incorporates the company's adherence to stable financial indicators without recourse to debt."
We will monitor the default rates and fluctuations in Kazakh housing prices and values, which could affect the company's stand-alone credit quality. We believe the company will likely continue benefiting from its near-monopoly position in the market and playing a critical role in the implementation of the state-supported housing program. This should result in strong implicit government support, especially in case of distress.
Should the government confirm its commitment to continue increasing MGFK's capital over the next few years, the rating could be raised. If the company's financial indicators deteriorate, however, or if the state does not confirm further capital increases in a renewed medium-term government program by year-end 2007, the outlook could by revised back to stable.
|Full company name||Mortgage Guarantee Fund of Kazakhstan JSC (MGFK)|
|Country of risk||Kazakhstan|