BAKU, Azerbaijan, February 1. Fitch Ratings has affirmed the long-term foreign-currency rating of Southern Gas Corridor CJSC's (SGC) senior unsecured Eurobond at 'BB+', Trend reports.
This affirmation is based on Fitch's continued assessment of SGC's $2 billion Eurobonds due in 2026, which are fully guaranteed by the Republic of Azerbaijan (BB+/Positive).
The rating reflects the unequivocal, non-subordinated, and irrevocable guarantee of complete and punctual repayment extended to SGC's noteholders by the government. Consequently, Fitch considers the rating of the notes to be aligned with Azerbaijan's Long-Term Foreign-Currency Issuer Default Rating (IDR).
SGC's notes benefit from explicit guarantees by Azerbaijan, enabling noteholders to pursue their claims directly against the state without the need for legal action against SGC beforehand. The guarantee is subject to English law and holds equal priority with all other unsecured external sovereign debt.
Historically, allocations for guarantee coverage have been included in the annual state budgets for 2016-2023, and this practice is anticipated to persist.
Southern Gas Corridor started transportation of Azerbaijani gas to Europe on December 31, 2020. It transports of gas from the Caspian Sea region to European countries through Georgia and Türkiye.
This large-scale project is aimed at diversification of energy supply routes and sources, thereby contributing to strengthening Europe’s energy security. The project’s cost totaled $33 billion, as compared to the forecast $45 billion. Capital expenditures on the SGC project are expected to be fully reimbursed within 8-10 years.
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