The Moscow Times- Kazakhstan’s central bank said Friday that it was capable of stabilizing the country’s banking system after what it called a “speculative attack” by large hedge funds.
“The National Bank of the Republic of Kazakhstan has … the necessary means and resources at its disposal and is also ready to undertake all necessary measures to maintain financial stability,” it said in a statement.
The central bank broke its silence after a torrid week for Kazakhstan’s banks, whose heavy borrowing abroad has made them vulnerable to the global credit crunch triggered by the U.S. subprime mortgage crisis.
The cost of credit default swaps offering insurance against possible default by Kazakh banks has blown out this week.
Banks’ bonds and stocks have slumped after ratings agencies Standard & Poor’s and Moody’s this week put under review several Kazakh ratings, including those of the sovereign and leading bank Kazkommerts, for a possible downgrade.
“The heightened concerns of international investors and creditors may represent, in our view, the result of a speculative attack by large hedge funds on the market for credit derivatives of Kazakhstan’s banks,” the statement said.
