Azerbaijan, Baku, Jan. 27 / Trend N. Ismayilova /
Moody's Investors Service has today assigned a provisional (P)Ba1 rating to the upcoming debut Eurobond to be issued by State Oil Company of the Azerbaijan Republic (SOCAR). The outlook is stable, the agency said today.
Moody's expects that the Eurobond issuance will total up to $500 million. The proceeds of the notes will constitute general unsecured and unsubordinated obligations of SOCAR.
Moody's anticipates that the maturity of the notes will not exceed five to seven years. Moreover, the rating agency expects that SOCAR will use the proceeds of the notes to partially fund its upstream and downstream activities, including financing of capital expenditure.
Today's assignment of a (P)Ba1 rating to SOCAR's upcoming debut Eurobond issuance is aligned with its Ba1 corporate family rating (CFR) and probability of default rating (PDR).
SOCAR's BCA of 13 reflects the medium scale of the company's reserves and production base, and its solid financial metrics. It also reflects the fact that SOCAR is a fully integrated oil and gas company that enjoys either a share in, or a full control over, the country's oil and gas pipelines for the domestic and export markets.
Moody's does not expect the new bond issuance to have a material negative impact on SOCAR's leverage profile and debt coverage ratios.
On a pro-forma basis and assuming the company's base-case oil price scenario of $80/barrel of oil (bbl) Brent, Moody's anticipates that SOCAR's debt/EBITDA ratio will remain below 2.0x following the bond issuance. The rating agency also expects that at the end of 2012, SOCAR's debt/EBITDA ratio will return to 1.5x or below; and the company will remain within the financial thresholds set by Moody's for the rating.