Doubtful Credit Rating of Azerenergy

The long-term credit rating of Azerenergy has been affirmed at BBB- with the same negative outlook. According to the international rating agency Standard & Poor`s, the local energy monopoly "has been placed under surveillance" in the negative list of Credit Watch.

The reason for such a decision was the devaluation of the manat on 21 December last year in connection with the transition to a floating exchange rate, as approximately 81% of the company’s external debt is subject to currency risks. The only thing that can save is state aid in the event of financial distress.

The government has no plans to raise tariffs on electricity because of the reluctance to create social problems, and it can also take on the repayment of the debt of the monopolist, which it periodically does.

The annual capital expenditure of Azerenergy will be at the level of 100-120 million manat. All this indicates a high probability of downgrade of its rating, which will be reviewed in 3 months. If the authorities against the background of the loss of foreign exchange reserves do not support the OJSC, its rating will fall. - 17D-