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SOCAR's liquidity to remain manageable, if its operations continue uninterrupted

Oil&Gas Materials 29 October 2020 09:41 (UTC +04:00)
SOCAR's liquidity to remain manageable, if its operations continue uninterrupted

BAKU, Azerbaijan, Oct.29

By Leman Zeynalova – Trend:

In its base case, S&P rating agency expects that Azerbaijani state oil company SOCAR's liquidity will remain manageable, its domestic operations and exports will continue uninterrupted, and S&P Global Ratings-adjusted FFO to debt will be about 9 percent-12 percent in 2020-2022, Trend reports citing S&P rating agency.

“We also expect that the government’s willingness and ability to provide extraordinary and ongoing support to SOCAR will remain solid,” said the agency in its report.

“We could downgrade SOCAR if: We downgrade Azerbaijan; The government’s ability and willingness to support SOCAR materially weakens, for example if the government focuses more resources for social and military purposes rather than cofinancing SOCAR’s new oil and gas projects; SOCAR’s liquidity materially weakens, which could happen if the local financial system comes under pressure, making a large part of SOCAR’s cash balances effectively unavailable, or if SOCAR loses access to international bank funding; or There is material damage to SOCAR’s operations or exports that cannot be easily repaired, which however is not our base-case scenario.”

“We could revise the outlook to stable if all of the following conditions apply together: We revise the outlook on Azerbaijan to stable; There are no signs of weakening state support to SOCAR; and SOCAR's liquidity and capital structure remain manageable,” reads the report.

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Follow the author on Twitter: @Lyaman_Zeyn

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