Fitch rates Uzbek capital 'BB-'; Outlook Stable

Baku, Azerbaijan, June 18

By Fakhri Vakilov - Trend:

Fitch Ratings has assigned Uzbek capital of Tashkent long-term foreign- and local-currency issuer default ratings (IDRs) of 'BB-' with Stable Outlook and a short-term foreign-currency IDR of 'B', Trend reports with reference to Fitch.

Tashkent's IDRs are equalized with the Uzbek sovereign IDRs (BB-/Stable). This reflects a combination of the city's low leverage, resulting in a 'aa' debt sustainability assessment according to Fitch's rating case, and a 'Weaker' risk profile.

The agency estimates that the city’s ability to contain costs in the event of a reduction in revenue is low, since the bulk of spending commitments is mandatory.

Fitch assesses Tashkent's standalone credit profile (SCP) at 'bb', which reflects a combination of a 'Weaker' risk profile (a result of six 'Weaker' key risk factors) and a 'aa' assessment of debt sustainability.

The notch-specific rating factors in a comparison with international peers. Fitch applies a single-notch downward adjustmemt for the city's weak reporting and transparency practices that lag behind international standards. As a result, the city's IDRs are equalized with the sovereign's 'BB-'.

Improvements to budgetary practices and a debt payback of about 6x on a sustained basis under Fitch's rating case could lead to a positive rating action, provided the sovereign is also upgraded.

A downgrade of the sovereign or deterioration of the city's debt payback to beyond nine years under Fitch's rating case would lead to a downgrade.

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