Fitch upgraded the ratings of Qazaqstan Investment Corporation JSC

The international rating agency Fitch Ratings has upgraded Qazaqstan Investment Corporation JSC (QIC) long-term issuer default ratings ("IDR") in foreign and national currency from "BB+" to "BBB-". The forecast is "stable".

The key factors of the rating upgrade were the growing support of QIC by the state and the definition of QIC as a Single Investment Institution contributing to the development of the alternative asset class market in Kazakhstan. This role, which implies regular interaction with government agencies responsible for economic development, finance and international cooperation, influenced the revision of the "Status, ownership and control" factor from "Strong" to "Very strong". In addition, the consolidation of several other subsidiaries of the Baiterek Holding on the basis of QIC was taken into account.

According to Fitch, the level of the state's ability and willingness to provide QIC support is still very high. In order to implement state investment programs, the state invests in the share capital of QIC, which increased by 69% in 2021-2023 and amounted to 147.8 billion tenge at the end of the first half of 2023 (while the equity capital amounted to 223.5 billion tenge, an increase of 58% over the same period). The state has also provided long-term debt financing for agricultural development projects and social infrastructure development projects, the report says.

At the same time, Fitch analysts emphasize the significant socio-political consequences in the event of a QIC default, which may temporarily jeopardize the implementation of state investment programs, as well as measures taken by the state in the last 10 years to develop the infrastructure of direct investment in Kazakhstan. The Fund finances projects from renewable energy to the food industry, infrastructure and natural resources. According to Fitch, these projects are of high importance for the state as part of the strategic task of diversifying the national economy.

Fitch also stressed that the sole shareholder of QIC, Baiterek Holding, supports and oversees the activities of the Corporation. The functions performed by QIC are close to the state, which reinforces Fitch's expectations regarding the possible involvement and financial support from the Government to prevent the default of the organization.

It is worth noting that according to Fitch's rating criteria on the national scale, the national QIC rating was also upgraded from "AA(kaz)" to "AA+(kaz)".

Background information: Qazaqstan Investment Corporation JSC is a fund of direct investment funds established in 2007, whose main mission is to develop private equity infrastructure in Kazakhstan in order to promote sustainable economic development of Kazakhstan. It is a subsidiary of NMH "Baiterek" JSC. Additional information can be found on the website https://qic.kz/en/.