Kazakhstan: Ratings Agency downgrades Astana
An influential ratings agency has downgraded the creditworthiness of Kazakhstan’s government, while slashing the ratings of 10 Kazakhstani banks.
Fitch Ratings moved the country’s long-term foreign currency Issuer Default Rating of BBB- to "rating watch negative" and warned that the crisis in the banking system could deepen significantly.
"Financial stress on Kazakhstan’s banking system is intensifying and Fitch expects that the sovereign may soon have to deploy more of its fiscal capacity to alleviate the strain, potentially weakening its own finances," the agency said in a statement February 19.
It added that the recent nationalization of the BTA and Alliance banks "testifies to the scale of problems being faced in the banking system," and that more public money may yet be needed to prop up the ailing financial sector.
Low government debt has so far helped Kazakhstan keep from defaulting on its obligations, but the government risks becoming overextended, the agency warned. The issuer default rating is a measure of a country’s ability to meet financial commitments on a timely basis. Kazakhstan is scheduled to repay $14 billion in external debts in 2009.