BAKU, Azerbaijan, September 9. Moody’s Ratings
has affirmed Kazakhstan’s Damu Entrepreneurship Development Fund
JSC’s (Damu) long-term local and foreign currency issuer ratings at
Baa2 and short-term issuer ratings at Prime-2, with a stable
outlook, according to the agency.
Moody’s also affirmed Damu’s long-term national scale issuer
rating at Aa2.kz. Damu is 100% owned by Baiterek National
Investment Holding JSC (Baiterek, Baa1 stable), the
government-owned development institution.
Damu’s Baa2 issuer ratings incorporate a five-notch uplift from
its b1 standalone assessment, reflecting the agency’s view of a
very high level of affiliate support from Baiterek, which is 100%
owned by the Government of Kazakhstan.
“Damu’s Baa2 issuer ratings incorporate a five-notch uplift from
its b1 standalone assessment, reflecting our view of a very high
level of affiliate support from its parent, Baiterek, which is 100%
owned by the Government of Kazakhstan (Baa1 stable),” Moody’s
said.
The affirmation also reflects Damu’s public-policy role as a
national development institution. Moody’s noted that access to
low-cost government funding, as well as government transfers and
fees on guarantees covering risks related to credit guarantees
extended to local banks, supports the company’s earnings generation
capacity.
Moody’s noted that Damu’s capitalisation remains strong, while
problem loans remain at low levels. At the same time, the agency
highlights risks related to Damu’s guarantee business, which is
focused largely on the relatively high-risk small and medium-sized
enterprise (SME) segment. The company’s funding profile also
remains undiversified and dependent on government-related
sources.
Credit risks are primarily driven by Damu’s guarantees
portfolio, which amounted to almost 3.5 times tangible common
equity (TCE) and exceeded total assets as of March 2026 following
rapid growth under government support programs. Moody’s noted that
guarantee-related risks have so far been more than offset by
income, but could put significant pressure on profitability as the
portfolio seasons, yields decline, and losses emerge.
The agency also noted that guarantees are largely provided to
higher-risk SMEs with limited collateral, increasing potential
losses as the portfolio matures.
Damu’s capitalisation remains a key strength. Its
TCE-to-tangible managed assets ratio stood at 43% as of March 2026
and at around 17% when guarantees are included. Moody’s considers
these capital buffers sufficient to absorb potential losses from
both balance-sheet exposures and guarantees, supported by strong
internal capital generation and a history of government capital
injections.
Damu’s profitability, measured by net income to average managed
assets and guarantees, reached 2.6% in the first three months of
2026, up from 1.8% in 2025. Revenue is generated primarily from net
interest income on funds channelled to banks for SME lending and
fees from its guarantees business.
However, Moody’s noted that profitability remains exposed to
credit losses on bank exposures, potential losses from the sizeable
guarantees portfolio and one-off gains or losses related to state
funding and low-cost lending.
Damu maintains a modest liquidity cushion, with liquid assets
equivalent to around 10% of total assets and guarantees as of March
2026. Moody’s said the company remains vulnerable to defaults on
large loan exposures or guarantee calls, although liquidity is
sufficient to cover repayments due in 2026-2027 and is supported by
the long-term nature of its predominantly government-related
funding.
“We expect a “Very High” support from its parent, Baiterek. This
leads to five notches of uplift from the company’s standalone
assessment of b1. Our assumption of “Very High” probability of
support reflects Damu’s indirect 100% government ownership (via
Baiterek); its development mandate and importance to the
government’s economic and social agenda; and a strong track record
of support,” Moody’s said.
The stable outlook on Damu is in line with the stable outlook on
Baiterek and Kazakhstan’s sovereign rating. It also reflects
Moody’s expectation that Damu’s standalone creditworthiness will
not change significantly over the next 12-18 months.
According to Trend’s analysis, the affirmation comes amid a broader
series of rating actions involving Kazakhstan and major
state-linked entities. On August 21, 2026, S&P Global Ratings
raised Kazakhstan’s sovereign credit rating to BBB from BBB-, with
a stable outlook. Following the sovereign upgrade, S&P also
raised the ratings of several major Kazakh organizations, including
KazMunayGas NC JSC (KMG), Damu Entrepreneurship Development Fund
and the Development Bank of Kazakhstan.
S&P raised Damu’s long-term credit rating to BBB from BBB-,
with a stable outlook, while the Development Bank of Kazakhstan’s
long-term and short-term credit ratings were upgraded to BBB/A-2,
also with a stable outlook.
The latest rating actions highlight the continued strengthening
of the credit profiles of major state-linked institutions in
Kazakhstan. In Damu’s case, Moody’s assessment shows that the
institution’s strong capital position and profitability are
important supporting factors, while its expanding guarantees
portfolio remains the main source of credit and earnings risk.
The five-notch uplift from Damu’s standalone assessment also
underscores the importance of Baiterek and government support to
the fund’s overall credit profile. At the same time, Moody’s focus
on guarantee-related risks indicates that the sustainability of
Damu’s financial performance will increasingly depend on the
quality and performance of the SME portfolio supported through
government programs.
