TASHKENT, Uzbekistan, August 10. Fitch Ratings has maintained the Long-Term Issuer Default Rating (IDR) of Uzbekhydroenergo JSC, Uzbekistan's energy company, at 'BB-' with a Stable Outlook, Trend reports.
This affirmation is based on the state's ongoing guarantee for all of UGE's debt and Fitch's anticipation that the proportion of debt with state backing will exceed 75 percent in the next four years. This alignment in UGE's rating with that of the sovereign is in accordance with Fitch's Government-Related Entities Rating Criteria (GRE).
"We have adjusted UGE's Standalone Credit Profile (SCP) from 'b' to 'b+', reflecting a less pronounced re-leveraging than our previous projections. This adjustment is attributed to a lower level of expansion capital expenditures expected between 2023 and 2026, compared to earlier estimates. This is due to UGE's optimization of its project pipeline and a slower depreciation of the Uzbek som," the agency said.
As Fitch noted, all of UGE's debt is backed by the government's guarantee. UGE intends to persist in funding its substantial capital expenditures for new constructions and modernizations amounting to over $1 billion (12 trillion Uzbek som) during the period 2020-2026, utilizing loans secured by the state from development banks and international financial institutions, as well as utilizing its own funds.
"UGE might start seeking non-guaranteed loans as the regulatory framework matures, allowing the company to become less dependent on state assistance. We predict that the share of state-guaranteed debt will continue to surpass 75 percent between 2023 and 2026, justifying the alignment of the rating," the agency concluded.