BAKU, Azerbaijan, September 21. Fitch Ratings has affirmed Kazakhstan's KazAgroFinance JSC's (KAF) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB-' with a Stable Outlook, Trend reports.
According to Fitch, the affirmation reflects the agency's consistent view of KAF's integration with the state and its role as a key provider of leasing services for agricultural production in Kazakhstan.
The unchanged assessment of support rating factors keeps KAF's ratings one notch below Kazakhstan's sovereign rating (BBB/Stable). The agency also assigned KAF a Standalone Credit Profile (SCP) of 'b+', which does not influence the overall rating.
Fitch's assessment of KAF's SCP at 'b+' is based on its "Non-Bank Financial Institutions Rating Criteria." The SCP is constrained by poor asset quality but reflects KAF's acceptable capitalization and strong funding access, supported by its policy role and state ownership. As a key leasing service provider to Kazakhstan's agricultural sector, KAF's asset quality has suffered from natural events in early 2024, such as droughts, leading to an increase in its impaired (Stage 3)/gross loans ratio to 33.2 percent by the end of the first half of 2024.
A significant portion of legacy investment projects remains on KAF's balance sheet, with most being impaired. As of the end of the first half of 2024, loss provisions covered only 38 percent of impaired loans, down from 59 percent at the end of 2022, which Fitch considers low, especially given the volatility and limited liquidity of the underlying collateral.
Fitch notes that a potential upgrade in KAF's ratings could occur if the company's links with the state strengthen through increased government support, status, or control, or if there is positive rating action on Kazakhstan's sovereign rating.
Fitch Ratings is a global credit rating agency that assesses the creditworthiness and financial stability of a wide range of organizations, including corporations, banks, governments, and other financial institutions.
The agency assigns ratings that reflect its evaluation of the risks associated with the probability of repaying debt commitments or paying interest on them.