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August 11, 2006 | Cbonds

The outlook is stable

Moody's Investors Service announced today that
it had upgraded the insurance financial strength rating of the State
Insurance Corporation for the Insurance of Export Credit and Investment
of Kazakhstan (Kecic) to Baa1 from Ba1. This concludes the review for
possible upgrade announced in our press release on 12 July 2006. The
outlook on the new rating is stable.

Headquartered in Almaty, Kazakhstan, Kecic was founded in August 2003 and
started operations in February 2004. It is 100% owned by the Republic of
Kazakhstan and is mandated to be the primary provider of export credit
insurance in the country, both commercial and political. In addition,
Kecic is writing inward reinsurance business in the Kazakh market.

Commenting on the upgrade, Moody's said that a key factor that added
positive pressure on the rating was the upgrade of Kazakhstan's foreign
currency bond rating to Baa2 from Baa3 on 9 June 2006. Furthermore,
Moody's said that the company's current plans foresaw a more limited rate
of growth than previously expected, ensuring that the company's strong
capitalisation will be maintained. Finally, Moody's concluded that Kecic
enjoyed very substantial support from the Government of Kazakhstan, as a
result of which the degree of implied support for the purposes of Moody's
GRI (Government Related Issuer) methodology was increased from 20% to 60%.

In accordance with Moody's GRI (Government Related Issuer) rating
methodology, the current rating of Kecic reflects a combination of the
following inputs: (i) Baseline credit assessment of 9 (on a scale of 1 to
21, where 1 represents the lowest credit risk), (ii) 100% dependence,
reflecting the company's operating and financial proximity to the
Government (iii) 60% support, reflecting the importance of Kecic in its
capacity as Export Credit Agency (ECA), somewhat offset by its status as
an underwriter of inwards reinsurance business which is associated with
more limited support from the Government.

Moody's said that further upward pressure on Kecic's rating was highly
unlikely to develop in the absence of positive rating actions on the
Republic of Kazakhstan bond ratings. Commenting on what could move
Kecic's rating down, Moody's mentioned faster than expected growth,
particularly in the non-core inwards reinsurance business, failure to
develop adequate risk management systems to accommodate growing exposure,
a change in asset allocation strategy resulting in a decline of the
credit quality of invested assets, as well as any evidence of weakening
support by the Government of Kazakhstan.

The date of the preceding rating action was 12 July 2006, when Kecic's
insurance financial strength rating was placed on review for possible

Kecic had shareholders equity of KZT8,792.8 million and total assets of
KZT9,038.4 million as of 31 December 2005. For FY 2005, it reported net
income of KZT205.5 million.

The following rating was upgraded and a stable outlook assigned:

The State Insurance Corporation for the Insurance of Export Credit and
Investment of Kazakhstan (Kecic) -- insurance financial strength rating
to Baa1 from Ba1

Company: KEG

Full company nameJoint Stock Company "Export Insurance Company "KazakhExport"
Country of riskKazakhstan
Country of registrationKazakhstan
IndustryFinancial institutions


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