Long-term Rating of Azerenergy - BBB- with Negative Outlook

The international rating agency Standard & Poor`s confirmed the long-term credit rating of JSC Azerenergy at BBB-. The short-term rating is affirmed at A-3. The ratings outlook changed from "stable" to "negative."

As noted in the report of the global structure, changes in ratings are due to the expected weakening of the financial support of the state in the event of financial distress on the background of the fallen stock prices of oil. The probability of extraordinary government support is presented as "almost unconditional" and is due to two factors. The first one is the important role of Azerenergy for the government given the status of a monopolist. The second one is communication with the government, given that 100% of its shares are owned by the state. Changes in the ownership of the structure are not expected in the next three years.

The state has always invested in this structure, implementing direct support for low rates. In addition, in 2010, payables of Azernergy amounting to $ 2 billion was written off. The same amount was written off for receivables.

Experts say directly that the rating of the agency is attached to the rating of the country, so that in the long term the "stable" outlook is possible in case of change of outlook on the sovereign ratings of Azerbaijan. --17D-