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Ratings On Mortgage Guarantee Fund of Kazakhstan Affirmed At 'BB-/kzA-'; Subsequently Withdrawn At Issuer's Request

December 13, 2010 | Standard & Poor's

MOSCOW (Standard & Poor's) Dec. 9, 2010--Standard & Poor's Ratings Services said today that it had affirmed its 'BB-' long-term issuer credit and 'kzA-' Kazakhstan national scale ratings on Mortgage Guarantee Fund of Kazakhstan (MGFK). The ratings were subsequently withdrawn at MGFK's request. At the time of the withdrawal, the outlook was stable.

MGFK is a state-owned niche market insurance guarantee provider based in the Republic of Kazakhstan (foreign currency BBB-/Stable/A-3; local currency BBB/Stable/A-3; Kazakhstan national scale 'kzAAA').

"At the time of the withdrawal, the ratings on MGFK reflected our expectations of a "moderately high" likelihood of timely and sufficient extraordinary support to MGFK from the Kazakh government in case of financial distress, as well as MGFK's "weak" stand-alone credit profile, which we assessed at 'b'," said Standard & Poor's credit analyst Boris Kopeykin.

In accordance with our criteria for government-related entities (see "RELATED CRITERIA AND RESEARCH" section), our view of the likelihood of extraordinary government support was based on our assessment of MGFK's "limited importance" for and "very strong" link with the government.


MGFK's 'b' stand-alone credit profile reflected the company's limited operational experience, its small scale, weak investment profile, and weak operating performance. These negative factors were partly offset by the company's adequate capitalization. As of Dec. 1, 2010, MGFK had guaranteed mortgage loans outstanding worth about KZT72 billion, with mortgage insurance provided under state-sponsored programs comprising about 88% of the company's portfolio.

At the time of the withdrawal, we expected the share of loans guaranteed under the state program to remain high over the next two years. The stand-alone credit profile incorporated MGFK's commitment to a "zero debt" policy, as well as the fact that, up until the date of withdrawal, no valid claims--and consequently no payments--had been made on MFGK's guarantees.


Company: Mortgage Guarantee Fund of Kazakhstan

Full company nameMortgage Guarantee Fund of Kazakhstan JSC (MGFK)
Country of riskKazakhstan
IndustryFinancial institutions

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