Fitch estimates Georgian Railway's standalone credit profile
BAKU, Azerbaijan, August 16
Tamilla Mammadova – Trend:
Fitch Rating has revised the Outlook on JSC Georgian Railway's (GR) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to Stable from Negative and affirmed the IDRs at 'BB-', Trend reports via the Fitch.
The rating actions follow the revision of Georgia's Outlook to Stable from Negative.
This rating action has a direct impact on GR's Outlook as it is considered a government-related Entity (GRE) of the Georgian state based on Fitch's GREs Rating Criteria.
"The affirmation reflects our unchanged assessment of the strength of linkage with the Georgian government and the government's incentive to support GR since our last review on November 20, 2020. GR's Standalone Credit Profile (SCP) is 'b+', which reflects a 'Weaker' assessment for revenue defensibility, 'Midrange' assessment for operating risk, and 'Weaker' financial profile with leverage (Fitch's net adjusted debt to EBITDA) approaching 6.5x in our rating case scenario at end-2024," the report said.
Fitch classifies GR as an entity ultimately linked to Georgia under its GRE Rating Criteria and assesses the GRE support score at 22.5, reflecting a combination of the following assessment of Key Risk Factors: a 'Strong' assessment for status, ownership and control and financial implications of default, and a 'Moderate' assessment for support track record and socio-political implications of default.
Based on this assessment Fitch applies a top-down approach under its GRE Criteria, which combined with GR's SCP assessment at 'b+' under Fitch's Public Sector, Revenue-Supported Entities Rating Criteria, results in a single-notch differential of GR's IDRs with Georgia's sovereign IDR (BB/Stable).
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