BAKU, Azerbaijan, September 9. Moody’s Ratings has affirmed Kazakhstan's Damu Entrepreneurship Development Fund JSC’s (Damu) long-term local and foreign currency issuer ratings at Baa2 and short-term issuer ratings at Prime-2, with a stable outlook, according to the agency.
Moody’s also affirmed Damu’s long-term national scale issuer rating at Aa2.kz. Damu is 100% owned by Baiterek National Investment Holding JSC (Baiterek, Baa1 stable), the government-owned development institution.
Damu’s Baa2 issuer ratings incorporate a five-notch uplift from its b1 standalone assessment, reflecting the agency’s view of a very high level of affiliate support from Baiterek, which is 100% owned by the Government of Kazakhstan.
"Damu's Baa2 issuer ratings incorporate a five-notch uplift from its b1 standalone assessment, reflecting our view of a very high level of affiliate support from its parent, Baiterek, which is 100% owned by the Government of Kazakhstan (Baa1 stable)," Moody’s said.
The affirmation also reflects Damu’s public-policy role as a national development institution. Moody’s noted that access to low-cost government funding, as well as government transfers and fees on guarantees covering risks related to credit guarantees extended to local banks, supports the company’s earnings generation capacity.
Moody’s noted that Damu’s capitalisation remains strong, while problem loans remain at low levels. At the same time, the agency highlights risks related to Damu’s guarantee business, which is focused largely on the relatively high-risk small and medium-sized enterprise (SME) segment. The company’s funding profile also remains undiversified and dependent on government-related sources.
Credit risks are primarily driven by Damu’s guarantees portfolio, which amounted to almost 3.5 times tangible common equity (TCE) and exceeded total assets as of March 2026 following rapid growth under government support programs. Moody’s noted that guarantee-related risks have so far been more than offset by income, but could put significant pressure on profitability as the portfolio seasons, yields decline, and losses emerge.
The agency also noted that guarantees are largely provided to higher-risk SMEs with limited collateral, increasing potential losses as the portfolio matures.
Damu’s capitalisation remains a key strength. Its TCE-to-tangible managed assets ratio stood at 43% as of March 2026 and at around 17% when guarantees are included. Moody’s considers these capital buffers sufficient to absorb potential losses from both balance-sheet exposures and guarantees, supported by strong internal capital generation and a history of government capital injections.
Damu’s profitability, measured by net income to average managed assets and guarantees, reached 2.6% in the first three months of 2026, up from 1.8% in 2025. Revenue is generated primarily from net interest income on funds channelled to banks for SME lending and fees from its guarantees business.
However, Moody’s noted that profitability remains exposed to credit losses on bank exposures, potential losses from the sizeable guarantees portfolio and one-off gains or losses related to state funding and low-cost lending.
Damu maintains a modest liquidity cushion, with liquid assets equivalent to around 10% of total assets and guarantees as of March 2026. Moody’s said the company remains vulnerable to defaults on large loan exposures or guarantee calls, although liquidity is sufficient to cover repayments due in 2026-2027 and is supported by the long-term nature of its predominantly government-related funding.
"We expect a "Very High" support from its parent, Baiterek. This leads to five notches of uplift from the company's standalone assessment of b1. Our assumption of "Very High" probability of support reflects Damu's indirect 100% government ownership (via Baiterek); its development mandate and importance to the government's economic and social agenda; and a strong track record of support," Moody’s said.
The stable outlook on Damu is in line with the stable outlook on Baiterek and Kazakhstan’s sovereign rating. It also reflects Moody’s expectation that Damu’s standalone creditworthiness will not change significantly over the next 12-18 months.
According to Trend’s analysis, the affirmation comes amid a broader series of rating actions involving Kazakhstan and major state-linked entities. On August 21, 2026, S&P Global Ratings raised Kazakhstan’s sovereign credit rating to BBB from BBB-, with a stable outlook. Following the sovereign upgrade, S&P also raised the ratings of several major Kazakh organizations, including KazMunayGas NC JSC (KMG), Damu Entrepreneurship Development Fund and the Development Bank of Kazakhstan.
S&P raised Damu’s long-term credit rating to BBB from BBB-, with a stable outlook, while the Development Bank of Kazakhstan’s long-term and short-term credit ratings were upgraded to BBB/A-2, also with a stable outlook.
The latest rating actions highlight the continued strengthening of the credit profiles of major state-linked institutions in Kazakhstan. In Damu’s case, Moody’s assessment shows that the institution’s strong capital position and profitability are important supporting factors, while its expanding guarantees portfolio remains the main source of credit and earnings risk.
The five-notch uplift from Damu’s standalone assessment also underscores the importance of Baiterek and government support to the fund’s overall credit profile. At the same time, Moody’s focus on guarantee-related risks indicates that the sustainability of Damu’s financial performance will increasingly depend on the quality and performance of the SME portfolio supported through government programs.
