Baku, Azerbaijan, May 22
By Maksim Tsurkov – Trend:
Standard & Poor’s Global Ratings said May 22 that its corporate credit rating, outlook, and issue ratings on the Azerbaijani state oil company SOCAR (BB/Negative/--) are unchanged following the announcement that one of Azerbaijan's largest banks, International Bank of Azerbaijan (IBA), will restructure its debt.
“Our rating on SOCAR remains underpinned by our assessment of an extremely high likelihood of extraordinary support from the government of Azerbaijan,” said the S&P message.
“We base our assessment on SOCAR’s critical importance to the hydrocarbon-focused country -- particularly with the large Shah Deniz-2 project, where SOCAR plays a central role, coming on stream next year. Also, we believe that the government is heavily involved in SOCAR's strategy and monitors its debt. However, we acknowledge that the company manages its day-to-day operations autonomously, and there are no state guarantees on the company’s debt.”
Therefore, the sovereign credit quality remains the key rating driver for SOCAR, reads the message.
“A negative rating action on SOCAR would arise if our assessment of SOCAR’s stand-alone credit profile (SACP) weakened to our 'ccc' category from 'b+' currently. At this stage, we do not expect this to happen,” S&P said.
S&P will continue to monitor the impact of IBA's current situation on SOCAR’s SACP, including leverage, liquidity, any losses of cash kept with the bank, and access to international capital markets, among other rating factors.
“We understand that SOCAR has some, but not all, of its cash reserves with IBA, and meaningful outstanding debt to IBA. We will also continue to assess any changes in the central government's policy regarding extraordinary support for its government-related entities, SOCAR in particular.”