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S&P upgrades SOCAR to ’BB+’

29 December 2011 08:35 (UTC +04:00)

The outlook is stable, the agency said today.

We upgraded SOCAR because we upgraded the Republic of Azerbaijan (BBB-/Stable/A-3).

The rating action is in line with Standard & Poor’s methodology for rating government-related entities (GREs). We continue to view the likelihood that Azerbaijan would provide timely and sufficient extraordinary government support to SOCAR as "extremely high". SOCAR is 100% government-owned and vertically integrated. We view SOCAR’s role in the country’s economy as "critical", owing to the company’s central role in the country’s most strategic sector, hydrocarbons, and its position as the country’s largest employer. SOCAR has a monopoly position in refining and petrochemicals, and is a minority shareholder and the government’s representative in Azerbaijan’s largest internationally led upstream projects, Azeri-Chirag-Guneshli (ACG; 11.6461% ownership) and Shah-Deniz (10%), the message said.

â€œDownside pressure on the rating is quite unlikely, in our view, but could materialize if SOCAR’s link with the state were to weaken. In line with our methodology for GREs, a deterioration of SOCAR’s stand-alone credit quality would pressure the rating only if it were very material, that is to ’b+’ or below, which we view as unlikelyâ€, told the agency