Fitch revises outlook on Kazakhstans ratings to stable from negative.

By bne IntelliNews December 18, 2009
Fitch affirmed Kazakhstan s long-term foreign currency issue rating at BBB- and long term local currency IDR at BBB and revised outlooks on both ratings to stable from negative. At the same time, Fitch affirmed short-term foreign currency IDR at F3 and the country ceiling at BBB. Fitch considers that Kazakhstans crisis-hit banking system remains a source of risk however, Fitchs base assume is that further cost for the sovereign of clearing up the risk will be containable at the current rating level. Moreover, higher oil prices, and capital inflows are boosting official reserves, strengthening Kazakhstan s balance sheet and further supporting the stable outlook. Fitch noted that Kazakh banking system has still to exit a crisis that broke with the dislocation of global capital markets in summer 2007. The ratio of non-performing loans (more than 90 days overdue) to total loans hit 19.7% in October 2009, up from 5.2% at end-2008. The system's aggregate capitalisation became negative in May 2009 on official figures, as problems at two large failed banks (BTA and Alliance ) were recognised. An improvement in the balance of payments is supporting the national currency KZT at its re-pegged level of about KZT 150 for USD 1, after devaluation in February, which reduces risks facing the banking sector, where some 51% of loans are FX-denominated. Kazakhstan 's official reserves rose to a record USD 23.3bn by end-November, up 17% ytd. Fitch forecasts general government debt at 13% of GDP at end-2009 and the general government is projected to remain a net creditor to end-2011. Continued evidence of stabilisation in the banking system and recovery in the broader economy, combined with consolidation of the external finances, would support the ratings.

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