OREANDA-NEWS. On April 09, 2008 Fitch Ratings has assigned HSBK (Europe) B.V.'s upcoming Eurobond issue of unsecured senior notes an expected Long-term 'BB+' rating. The final rating is contingent on receipt of final documents conforming materially to information already received, reported the press-centre of KASE.

Proceeds from the issue of the notes will be deposited with Halyk Bank of Kazakhstan (Halyk). Halyk will unconditionally and irrevocably guarantee the timely and full repayment of the notes in the trust deed between Halyk, HSBK (Europe) B.V. and the trustee, Deutsche Trustee Company Ltd. HSBK (Europe) B.V. is a Netherlands-domiciled subsidiary of Halyk. Halyk is rated Long-term foreign currency Issuer Default (IDR) 'BB+', Long-term local currency IDR 'BBB-' (BBB minus), Short-term foreign currency IDR 'B', Short-term local currency IDR 'F3', Individual 'C/D', and Support ?'. The Outlooks for the Long-term ratings are Negative.

The terms and conditions of the notes specify that they will rank at least equally with the claims of other unsecured and unsubordinated creditors of the issuer and that the obligations of Halyk under the guarantee will rank at least equally with claims of other unsecured and unsubordinated creditors of Halyk, save those preferred by relevant (bankruptcy, liquidation etc.) laws.
 
Under Kazakh law, the claims of retail depositors rank above those of other senior unsecured creditors. At end-December 2007, retail deposits accounted for around 25% of Halyk's total liabilities, according to the bank's audited IFRS financial statements.

Covenants limit Halyk's common stock dividend payments to 50% of net income in any particular year and also specify that the terms of all transactions of more than USD5m must be concluded on a market basis. The expected issue is subject to a cross default clause that becomes
applicable should an aggregate principal amount of overdue financial debt or guarantee exceed USD10m.

Halyk was the third-largest bank in Kazakhstan at end-2007 with a 13,4% share of assets, and the largest bank by retail deposits (24% market share) and branch network. The Almex Group, beneficially owned by the daughter and son-in-law of Kazakhstan's President Nazarbayev, own a majority (68,7% of voting shares) stake, while institutional and individual investors held a 31.3% stake following the December 2006 IPO.