Moody’s lowers SOCAR's baseline credit assessment

Moody’s lowers SOCAR
# 24 August 2017 13:15 (UTC +04:00)

The outlook on the ratings is stable, APA-Economics reported citing the agency.

"Our decision to downgrade SOCAR follows the recent downgrade of the
sovereign, to which the company is linked, as well as its weaker
standalone credit profile on the back of growing debt and elevated
capital spending," says Denis Perevezentsev, Vice President - Senior
Credit Officer at Moody's.

The rating reflects Moody's conservative view on (1) potential
challenges in maintaining stable production in the longer term; (2) the
company's expanding trading operations, which negatively impact its
operating cash flow and leverage; and (3) the sensitivity of the
company's metrics to oil prices and local currency exchange rate, which
are likely to remain volatile over the next 12-18 months.

Despite the significant and long-lasting weakening of Azerbaijan's fiscal
and economic strength, Moody's assumptions regarding the government's
willingness and ability to provide extraordinary support to SOCAR remain
unchanged. Azerbaijan consistently renders support to SOCAR through
adjustments to regulated prices, direct equity injections, financing of
key investment projects and provision of loans by the Ministry of Finance.