BAKU, Azerbaijan, Jan.29
By Fidan Babayeva – Trend:
S&P Global Ratings has revised the outlook on Azerbaijan’s AzerEnergy OJSC from ‘negative’ to ‘stable’ and affirmed its credit rating at BB/B, Trend reports referring to S&P analysts' report.
“We expect AzerEnergy to continue getting significant state support, given its important role and close ties with the government, provision of the support in the past, and the functions of this company in the industries it operates,” the analysts said.
S&P also assessed the likelihood that Azerbaijan’s government would provide timely and sufficient extraordinary state support in the event of financial distress as extremely high considering that in the past the government has repeatedly provided financial assistance to Azerenergy, including in the form of state guarantees for long-term financing capex and government loans, as well as strict control over the debt payments of the company.
"Currently, about 85 percent of the company's debt falls on borrowing from the government, and the rest debt is government-guaranteed. The Azerbaijani Finance Ministry has provided financial support to the company many times in the past, including interest payments on the company's debt, capital inflows, direct government borrowing, and tax reliefs,” the report also noted.
“We believe that this state of affairs will continue in 2021. So, as we understand, the government has reserved funds in the budget in an amount sufficient to pay off the company's debt and interest on it in the current year, if required. We also expect the company will avoid borrowing from third-parties without government guarantees,” added the S&P analysts.
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