OREANDA-NEWS. Standard & Poor's Ratings Services affirmed its 'BBB/A-2' long- and short-term foreign and local currency issuer credit ratings on sovereign wealth fund and joint stock company Samruk-Kazyna. The outlook is negative. We also affirmed our 'kzAA+' Kazakhstan national scale rating.

The ratings on Samruk-Kazyna reflect our classification of the fund as a government-related entity (GRE) and our assessment that there is an almost certain likelihood that the government of Kazakhstan would provide timely and extraordinary support to Samruk-Kazyna if the fund ran into financial difficulties.

Our view, in accordance with our criteria for rating GREs, is based on our assessment of Samruk-Kazyna's:

Integral link with the government, which fully owns the fund and offers strong direct and implicit support, including regular capital injections. Despite several changes at the shareholder level, the government is closely involved in determining Samruk-Kazyna's strategy, which is set outin several key strategic documents; and

Critical role as the government's main vehicle for implementing its agendafor strategic industrialization and long-term economic sustainability and diversification. Samruk-Kazyna controls essentially all strategic corporate assets in Kazakhstan.

Samruk-Kazyna has implemented key national policies since it was established by a presidential decree in 2008. It consolidates almost all of Kazakhstan's state- owned corporate assets and manages them on behalf of the government, playing a central role in meeting the government's key economic, political, and social objectives. Samruk-Kazyna is highly integrated with the government, and the government plays a decisive role in its operations. By law, all board members are heads of central executive bodies and the prime minister of Kazakhstan is the chairman. Although the government plans to sell minority stakes in several of  Samruk-Kazyna's subsidiaries through the "People's IPO" program (launched in  2012) and through a recently initiated privatization program, we understand that Samruk-Kazyna will retain control over these assets. We are not aware of any plans to partly or fully privatize Samruk-Kazyna.

In May 2013, Samruk-Kazyna turned over the management of five development institutions and financial organizations to Baiterek, a newly established state-owned agency. Baiterek's mission is to help develop and facilitate investments into the national economy. The government has stated that it wantsSamruk-Kazyna to manage businesses that target profitability, while Baiterek manages development institutions whose strategies are not based on profit-making.

The negative outlook mirrors the outlook on the long-term sovereign ratings onKazakhstan, taking into account that we are unlikely to change our assessmentsof Samruk-Kazyna's critical role for and integral link with the government.

We could lower the ratings on Samruk-Kazyna if we perceived any signs of weakening sovereign support--for example, Samruk-Kayzna deviating from its policy role or changes to how the government manages its assets--which lead usto negatively reassess Samruk-Kazyna's role for and link with the government.

We would likely raise or lower the ratings on Samruk-Kazyna if we raised or lowered the ratings on Kazakhstan.