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Fitch downgrades Kazakhstan

FitchRatings downgraded Kazakhstan's long-term foreign-currency issuer defaultrating to BBB from BBB+ and its local-currency issuer default rating to BBBfrom A-.

Theoutlooks are stable, according to the April 29 release.

The issuerating on the sovereign's senior unsecured foreign-currency bonds was also cutto BBB from BBB+. The country ceiling was revised to BBB+ from A-, and theshort-term foreign-currency issuer default rating affirmed at F2.

Fitchsaid the Kazakh banking system remains a rating weakness, with a Fitch BankingSystem Indicator of "b." Kazakh lenders' asset quality and capitalwill remain under pressure in 2016 from still large unprovisioned problemloans, estimated at double nonperforming loans and the Kazakh tenge'sdevaluation, which will hurt foreign-currency borrowers' ability to servicedebt.

Therating agency noted that Kazakh authorities maintain a cautious stance tofiscal policy, under the assumption that oil prices are expected to remainlower for longer, scaling back non-priority infrastructure projects andlimiting foreign borrowing.