S&P Global Ratings affirms Azerenerji's rating

Finance Materials 28 October 2020 12:32 (UTC +04:00)
S&P Global Ratings affirms Azerenerji's rating

BAKU, Azerbaijan, Oct. 28

By Zeyni Jafarov - Trend:

The hostilities in Nagorno-Karabakh have no significant impact on the assets of Azerbaijani electricity provider, Azerenerji OJSC, Trend reports citing the Standard & Poor's (S&P) Global Ratings agency.

According to the agency, the credit rating of the Azerenerji is closely linked to the country's government's creditworthiness due to the "extremely high" likelihood of extraordinary government support, and considering that the company's entire debt is either guaranteed by the Azerbaijani government or provided to them.

Azerenerji will continue to receive significant government support, including in the form of capital injections, to cover a significant portion of its debt service costs.

In this regard, S&P is revising the outlook on Azerenerji's ratings from Stable to Negative and affirming the company's credit ratings at ‘BB/B’. It is also assumed that in case of serious impact on any assets of Azerenerji, as well as an increase in the risk to the security of the country's energy system, the government will provide the company with the necessary financial assistance.

In the future, Azerenerji may invest in the development of infrastructure in the territory of Nagorno-Karabakh, but they won’t be significant and won’t require large borrowings at the company level, which won’t be supported by the government.

Azerenerji's ratings could be downgraded if the government stops taking measures to provide financial assistance to the company, which will indicate a decrease in the likelihood of providing it with state support.

The agency can revise the forecast on the ratings to "Stable" in case of revision of the forecast on the sovereign ratings of Azerbaijan to "Stable”.


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