BAKU, Azerbaijan, Nov. 11
By Fakhri Vakilov-Trend:
Standard & Poor’s (S&P) Global Ratings affirmed its 'BB-' long-term issuer credit rating on Uzbekistan's Tashkent region; the outlook is stable, Trend reports with reference to S&P.
The agency noted that the stable outlook reflects the assumption that Tashkent region will maintain its strong budgetary performance supported by Uzbekistan's strong economic growth.
“We also assume that the region will keep its debt burden low in the medium term. We also believe that, if permitted by national regulation, Tashkent region’s commercial borrowings will be moderate and the region will not significantly accumulate market debt,” S&P reported.
S&P might lower the rating on Tashkent region in case of lowering sovereign ratings on Uzbekistan.
“We would also consider a negative rating action on the region if we observed rapid debt accumulation beyond management's plans,” the agency said.
On the other hand, S&P might consider a positive rating action if the institutional framework under which Tashkent region operates becomes more predictable and supportive. An upgrade would also depend on taking a similar rating action on Uzbekistan.
The rating on Tashkent region reflects S&P’s view that a fast-growing economy and strong financial results help the region keep sufficient liquidity without resorting to commercial borrowing. At the same time, the volatile and unpredictable institutional framework, and low wealth levels continue to constrain credit quality.
“We project the region will continue its infrastructure development without resorting to substantial commercial borrowing,” the agency stated.
S&P expects that Tashkent region’s economy to continue its rapid growth mirroring Uzbekistan's at 5.3 percent on average annually over 2019-2021, supported by the growth in the manufacturing, agricultural, and service sectors.
Capital investment in the region will likely increase, while budgetary performance will remain strong, the report said.
S&P assumes that Tashkent region's liquidity position will remain solid and comfortably cover the region's annual debt service over the next 12 months.
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