MOSCOW (Standard & Poor's) Dec. 11, 2008--Standard & Poor's Ratings Services said today that it had affirmed its 'BB ' rating on the unsecured debt issued by Kazakhstan's state-owned transmission grid operator Kazakhstan Electricity Grid Operating Co. (JSC) (KEGOC; BB /Negative/--).
At the same time, a recovery rating of '4' has been assigned to the unsecured €255 million bank loan from the European Bank for Reconstruction and Development(EBRD), indicating our expectation of average (30%-50%) recovery for the lending bank in the event of a payment default.
In a default scenario, recovery prospects for the loan are likely to be heavily determined by the ability and willingness of the Kazakhstan government to negotiate with the EBRD. The recovery rating of '4' reflects our expectation that the bank would likely receive at least partial repayment, but reflects this key uncertainty. Actual recovery of the rated loan could be higher or lower than the range indicated.
We assume that the EBRD loan ranks pari passu with unsecured loans guaranteed by the state. However, the state guarantees provide a secondary source of repayment which could lead to higher recoveries on these debt facilities than on the rated loan.
For a complete analysis of the recovery ratings, please see "Kazakhstan Electricity Grid Operating Co. (JSC) Recovery Rating Profile," published today on RatingsDirect.