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“Azərenerji”nin reytinq proqnozu "neqativ"də saxlandı

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“Azərenerji”nin reytinq proqnozu "neqativ"də saxlandı
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“Standard&Poors” Beynəlxalq Reytinq Agentliyi “Azərenerji” ASC-nin uzun və qısamüddətli korporativ kredit reytinqini “BB/B” səviyyəsində təsdiq edib. 

Agentliyin ölkənin əsas enerji istehsalçısının reytinqi üzrə proqnozu isə "neqativ"dir. 


“Standard&Poors” bəyan edib ki, “Azərenerji” hələ də hökumətin müəyyən dəstəyindən yararlanır: “Hökumət “Azərenerji”nin likvdiliyini təmin etmək üçün ona dəstəyini davam etdirib. Bura əsas borcların və faizlərinin ödənməsi daxildir. Gözləyirik ki, bu dəstək davam edəcək, amma həm də görürük ki, həmin dəstək getdikcə zəifləyir. Şirkətin genişlənmiş investisiya proqramının icrasına dair qeyri-müəyyənlik var. Digər tərəfdən qurumun yığımlarının əsas hissəsi “Azərişıq” ASC-dən gəlir. Nəhayət, hökumətə nisbətən “Azərenerji”nin xarici borcları daha yüksəkdir". 


Azerbaijan-Based Electricity Utility Azerenerji 'BB/B' Ratings Affirmed; Outlook Remains Negative


S&P Global Ratings today affirmed its 'BB/B' long- and short-term issuer credit ratings on Azerbaijan-basedelectricity utility Azerenerji. The outlook remains negative.


The affirmation reflects our view that the likelihood that Azerenerji will receive government support, if needed, continues to be almost certain. At the same time, we see high uncertainty about the funding of Azerenerji's enlarged investment program, sustainability of cash collection from distribution grids operator Azerishiq, and general government's tolerance to relatively high debt at Azerenerji. Any indications of weakening ongoing and extraordinary government support could make us reassess the uplift we currently incorporate in our rating on Azerenerji and potentially lead to a multi-notch downgrade.


We observe the government so far has been able and willing to cover Azerenerji's liquidity shortages, including the maturing debt and interest payments. Under our base case, we expect this to continue. The government guarantees most of the company's debt as of the end of 2017 and, in line with the Cabinet of Ministers' decision, will provide equity injections to Azerenerji to support repayments of foreign currency loans over 2018-2025. We understand that the government has budgeted sufficient financial injections to cover the company's debt and interest payments due in 2018, if needed.


We believe that the Ministry of Finance closely monitors Azerenerji's debt payments and that Azerenerji, similar to other government-related entities (GREs) in the country, cannot incur any new borrowings without the government's approval.


We also understand that the government helped Azerenerji to achieve almost full cash collection from Azerishiq, which was previously problematic. Azerishiq is a GRE which, following unbundling, operates Azerbaijan's distribution grids and provides more than 95% of Azerenerji's revenues. The higher collection rate was a result of enhanced monitoring of certain GREs, including Azerenerji. All the company's revenues are now collected on a special account and all cash outflows should be approved by the government.


We continue to believe that, without ongoing and extraordinary state support, Azerenerji would face difficulties in servicing its debt because of high leverage and enlarged investment needs of about Azerbaijani new manat (AZN) 1 billion ($600 million) in the next three years. We understand that, in line with the government's roadmap for the energy sector, Azerenerji plans large capital expenditures (capex) to improve the quality of its assets following several years of historical underinvestments. At the same time, we see that Azerenerji's cost structure has improved after unbundling, and, under our base case for 2018, we assume the entity will generate stable funds from operations (FFO) compared with 2017, at a level almost 2x higher than 2015 (before the unbundling). Thus, we now assess Azerenerji's stand-alone credit profile (SACP) at 'b-', including the ongoing state support (such as monitoring of full payments by Azerishiq).


Still, we continue to see uncertainty about the government's commitment to the company in the longer term. Although the government provides financial support to cover the company's ongoing debt payments and monitors cash collection, it still tolerates high debt at Azerenerji, and funding of enlarged capex remains uncertain. We don't rule out that eventually the government could reduce monitoring of stand-alone performance and liquidity, if the SACP further improves.


Therefore, we do not equalize the ratings on Azerenerji with those on Azerbaijan (BB+/Stable/B). Instead, we continue to apply a one-notch downward adjustment from the sovereign rating to arrive at our issuer credit rating on Azerenerji. Our reassessment of the likelihood of extraordinary government support could lead to a multi-notch downgrade of Azerenerji.


Our current assessment of an almost certain likelihood of government support is based on our view of Azerenerji's: Critical role for the government as the sole transmission system operator and the state's largest electric utility. It's also a government arm for implementing strategies in the electricity sector. Furthermore, the state's economic development and social mandates ensure reliable and affordable electricity provision, in our view; and Integral link with the government, given its 100% ownership and our expectation that this will not change in the next three years. According to the company's information, the state guarantees almost all of the company's debt. The Azerbaijani government has also closely overseen Azerenerji's operations and strategies and the utility understands that a default would put the sovereign's reputation at risk. Azerenerji's president is appointed by the president of Azerbaijan. Approval from the latter is also required for Azerenerji's new state-guaranteed borrowings. 


We also understand that, during 2017, the government supported Azerenerji's debt repayments and we expect this will continue in 2018.


From December 2016, the Tariff Council increased Azerenerji's tariffs by about 33% in order to compensate for the 50% increase in prices of gas and 2.4x increase in prices of fuel oil purchased from the sole supplier, Azerbaijan's state oil company, SOCAR. We do not anticipate new tariff revisions, at least in the next two years, given the economic and social sensitivity of such moves. We expect the company to report positive results from operating activities, but we forecast discretionary cash flow will turn negative in 2018 if heavy capex is not supported by the state.


We continue to view high risks related to the current capital structure, since about 85% of the debt portfolio is denominated in foreign currencies and the company remains exposed to the risk of fluctuations of exchange rates. There are no substantial cash flows in foreign currencies to mitigate this risk.


In this report, we disclose limited financial information due to confidentiality of such numbers. The company made the latest audited financial statements and management's projections available to us for review.


The negative outlook on Azerenerji reflects continuing uncertainty about the

government's long-term strategy to provide ongoing and extraordinary support

to Azerenerji. In particular, we will focus on the funding of the enlarged

investment program, sustainability of cash collection from Azerishiq, and

tariffs that provide cost pass-through, as well as general government's

tolerance to relatively high debt.


Any new debt issued without guarantees would in our view signal weakening

government support. Also, any weakening in the government's mechanisms to

monitor the company's liquidity position and provide financial support to

cover liquidity shortages may also put pressure on the rating.


In our base case, we expect the company's structure and current asset

composition will remain unchanged in the near term and stand-alone credit

quality will remain weak, with a significant debt portfolio and material

investment program at least in the next two to three years.


We could downgrade Azerenerji if we considered that the government's

willingness and ability to support the company in cases of financial stress

had weakened. For example, Azerenerji's failure to make maturing debt payments

from its own sources, and a lack of government commitment to cover such

payments, or issuance of new debt without state guarantees, may indicate a

weakening of the likelihood of extraordinary government support and could lead

to a multi-notch downgrade.


In addition, indications of negative government intervention or lack of

ongoing support, leading to deterioration in Azerenerji's SACP could lead us

to lower our ratings on the company. For instance, if the government did not

timely fund the significant investment program enforced by the state or did

not control timely cash payments from the major counterparty Azerishiq, it

would negatively impact the company's stand-alone credit quality, in our view,

and signal a lack of ongoing state support.


If we were to lower the long-term sovereign rating on Azerbaijan by one notch,

this would likely result in a similar rating action on Azerenerji, all else

being equal. However, this scenario is unlikely, considering our stable

outlook on our rating on Azerbaijan.


We would likely revise our outlook on Azerenerji to stable if we observed

substantial government steps supporting the company. In particular, a stable

outlook would require the new capex program to be funded with equity or

government-guaranteed debt, continuing government support to cover any

liquidity shortages, and sustainable stand-alone performance, with tariffs

covering any cost increases and robust cash collection pattern.



© Report, S&P

16.02.2018 07:23
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