BAKU, Azerbaijan, October 27. Moody’s Ratings
has upgraded the corporate family rating of Kazakhstan’s
state-owned grain trader National Company Food Contract Corp JSC
(FCC) to B1 from B2, citing improved operating cash flow, lower
debt, and more conservative financial policies, according to the
agency.


The outlook remains positive. The company’s probability of
default rating was also upgraded to B1-PD from B2-PD, while its
baseline credit assessment (BCA) was raised to b3 from caa1.


“The rating action reflects FCC’s material improvement in
operating cash flow and leverage in 2025 after several years of
very weak financial performance. The recovery resulted from
stronger governance, including a shift to more conservative
operating and financial policies, and the government’s
implementation of long-discussed support measures,” Moody’s
said.


The positive outlook reflects the potential for further
improvement if FCC sustains its conservative policies, maintains
sound liquidity and continues to receive government support, the
agency said.


FCC’s operating performance has historically been volatile due
to agricultural sector cyclicality and its role as the regulator of
Kazakhstan’s grain market. These factors, combined with aggressive
operating and financial policies shaped by government objectives,
weakened the company’s credit quality in 2021-2024 and left its
capital structure unsustainable, according to Moody’s.


Since the second half of 2024, FCC has pursued a more
conservative operating policy under a new state-backed funding
framework designed to improve the stability and commercial
viability of its trading operations. The government approved the
gradual replacement of short-term commercial borrowings with
subsidized financing.


The government also allocated 70 billion tenge ($155.2 million)
in new equity to restore working capital for the 2024-2025 grain
procurement plan, including 40 billion tenge ($88.7 million) in
2024 and 30 billion tenge ($66.5 million) in 2025. In addition,
transportation subsidies were introduced for grain exports in
2025-2026, with plans to extend them into 2027.


FCC also accelerated the release of its large accumulated grain
inventories. Higher grain sales, the settlement of trade credits
and the receipt of state subsidies lifted cash flow from operations
(CFO) to 73 billion tenge ($161.8 million) in 2025, returning it to
a strongly positive level for the first time since 2018.


FCC used this operating cash flow, together with proceeds from
maturing financial investments, to repay expensive foreign-currency
commercial loans. These repayments reduced Moody’s-adjusted debt by
around 30% in 2025, while lower debt and a shift to subsidized
domestic bonds almost halved interest expenses.







As a result, FCC’s Moody’s-adjusted debt-to-EBITDA ratio
improved to 6.1 times in 2025, following negative EBITDA in
2023-2024. Its net debt-to-EBITDA ratio was close to zero because
of the company’s substantial cash balance.


Moody’s expects FCC’s adjusted debt-to-EBITDA ratio to remain
below 4.0 times for full-year 2026, including 2.9 times for the 12
months ended June 2026, as earnings normalize. The agency also
expects the company to move into a net cash position.


FCC’s earnings and profitability in 2026-2027 will remain
sensitive to grain price fluctuations and dependent on the
availability of subsidies to offset high transportation costs.
However, Moody’s expects cash flow from operations to remain
positive because grain sales will exceed purchases, supporting
further debt repayment.


FCC aims to repay almost all its debt in 2027 and fund grain
purchases mainly from internal resources, using subsidized debt
only moderately. Moody’s said that a lighter balance sheet and
substantial grain stocks would strengthen FCC’s ability to absorb
earnings and cash-flow volatility caused by market cyclicality,
government-mandated interventions and seasonality. However,
deleveraging would mitigate, but not eliminate, these structural
risks.


Moody’s also noted that FCC has yet to demonstrate sustained
adherence to conservative operating and financial policies
throughout market cycles, including periods of market distress. The
new state support mechanism has yet to demonstrate consistency in
providing timely financial assistance and sufficient compensation
for government-mandated interventions.


FCC’s BCA also reflects its status as Kazakhstan’s state grain
trader and its strategic role in food security and grain-market
development, its track record of direct state financial support,
and its sound liquidity. The company’s liquidity is supported by
access to financing secured against substantial grain reserves and
by committed bank facilities.


Moody’s classifies FCC as a government-related issuer because it
is owned by the Government of Kazakhstan, which has a Baa1 rating
with a stable outlook. Under the agency’s methodology, FCC’s B1
corporate family rating reflects its B3 BCA, the government’s Baa1
rating, a strong probability of state support in the event of
financial distress, and moderate default dependence between FCC and
the government.


The tenge-to-dollar conversions are based on the official
exchange rate of $1 = 451.05 tenge set by the National Bank of
Kazakhstan as of October 27, 2026.