As in much of the developed world, Kazakhstan has determined that the global crisis has left it with few choices.

A string of moves to shore up troubled banks since last fall hit a crescendo last week when the Kazakh government snapped up a 78% stake of BTA Bank for 251 billion tenge ($2.1 billion) and said it would do the same to a 76% chunk of Alliance Bank. The conduit for these mega purchases is the aptly-named Samruk-Kazyna National Welfare Fund.

BTA and Alliance both have outstanding deals backed by diversified payment rights (DPRs), as do their beleaguered brethren ATF Bank and Kazkommertsbank (KKB). Combined, the quartet issued about $2.1 billion from 2005 to 2007, as tracked by ASR.

These deals are very much linked to the ongoing business of the originators, so DPR players should be watching the Kazakh's dirigisme - what it says about the government's wherewithal and willingness to boost banks, balanced by what it says about the desperate state of those same banks.

But even before getting into all that, there's a more immediate question: can these takeovers trip deal triggers?

Probably not, says Gary Kochubka, senior director at Standard & Poor's.

"The transactions rated by S&P do include a change-in-control clause. A trigger (early amortization) could be tripped by what is viewed as 'nationalization' - but from S&P's financial institution analysis side we don't see what's happened as a nationalization," Kochubka said.

He added that in a BTA-arranged market conference call, the bank and Kazakh regulatory agency the FSA said the move was a change in ownership, rather than a change in control.

And it's meant to be temporary. BTA's Web site states that Kazakh Finance Minister Bolat Jamishev "pledged that 'the due course, will take steps to let the bank back into private hands.'"

Indeed, within a day of the takeover, reports were swirling that the Samruk-Kazyna Fund had approached Sberbank to purchase half of the controlling stake. The Russian government, by the way, owns 60% of Sberbank.

Of course, DPR bondholders may see things differently. What's more, investors in unsecured debt might claim a breach in covenants, which could raise cross-default issues, said a couple of players active in DPRs.

But putting trigger talk and the semantics of nationalization aside for a minute, government ownership - even if protracted - wouldn't necessarily be a problem for BTA or Alliance, and by extension, their DPR transactions. Some observers might welcome this as a sign that the Kazakh government is strongly committed to keeping its banks afloat.

That's generally a good thing. When you look at the ratings of the banks and the sovereign, the latter is generally a few notches higher, reinforcing the view that support is an unqualified strength.

But for the DPR deals it could be more neutral.

Fitch Ratings and S&P both rate the sovereign's foreign currency 'BBB-' with a negative outlook. S&P gives its Kazakh DPR deals from BTA and KKB 'BBB-' standalone ratings, while Fitch rates Alliance's DPR program 'BBB-'with a negative outlook.

Moody's Investors Service rates the sovereign 'Baa2', while standalone ratings for DPR transactions originated by BTA and KKB are at 'Baa3' and on review for downgrade. The agency has ATF Bank's DPR program at 'Baa2', on review for downgrade.

Moody's put these deals on downgrade review on Dec. 12. A cut in the deals would make them split rated, a prospect that has players watching the agency closely for its next move.

Neither banking nor structured finance analysts at Moody's returned calls for comment or written questions via e-mail in light of the most recent news to hit the country.

(c) 2009 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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