Baku, Azerbaijan, March 17
By Maksim Tsurkov - Trend:
The Southern Gas Corridor project's (SGC) net financial needs for operations and capex will be close to $8.4 billion in 2016-2019, said the message of the international ratings agency Fitch Ratings on March 17.
"Fitch expects SGC to tap debt capital markets for funding in the medium term, while bonds and loans could be supplemented by state capital injections should offered market terms be unacceptable," according to the message.
Fitch Ratings has assigned CJSC Southern Gas Corridor's (SGC) senior unsecured Eurobonds a 'BB+(EXP)' expected foreign currency long-term rating.
"The bond's final rating is contingent on the receipt of final documentation conforming to that held and confirmation of the final amount and tenor of the notes," said the message.
The rating reflects Fitch's expectation that Azerbaijan will honour the unconditional, unsubordinated and irrevocable guarantee provided to noteholders in a full and timely manner. As a result, Fitch views the notes as credit-linked to the sovereign. The notes' rating is aligned with the rating of Azerbaijan and factors in SGC's state ownership, close financial integration with the government and strategic importance of its projects to country's development.
"In Fitch's view, projects under SGC's development carry strategic importance for Azerbaijan's long-term macroeconomic stability, while the most of the gas is already contracted until 2045 by buyers from the EU and Turkey," according to the message.
Fitch considers Azerbaijan's control over SGC's operations as strong and views government support previously provided to SGC as a supportive rating factor, said the message.
Earlier, the Azerbaijani government held road shows of bonds for the SGC in the world's major financial centers - London, New York, Los Angeles, San Francisco and Boston.
Depending on market conditions, the SGC's bond offering under the state guarantee is forecasted at the level of $1 billion.
Floatation is provided for the financing of Shah Deniz-2 and South Caucasus Pipeline (SCP) projects and Trans Anatolian (TANAP) and Trans Adriatic (TAP) pipelines.
Citibank, UniCredit and J.P. Morgan are the authorized companies on floatation of bonds. Lazard Frères SAS company, in turn, acts as a financial advisor of the Azerbaijani side.
The Southern Gas Corridor is one of the priority energy projects for the EU. It envisages transportation of 10 billion cubic meters of Azerbaijani gas from the Caspian Sea to Europe through Georgia and Turkey.
---
Follow the author on Twitter: @MaksimTsurkov