Azerenergy Drowning in Debt – Fitch

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elektrik2The international rating agency Fitch has affirmed long-term issuer default rating (IDR) of Azerenergy at the level of «BB +», short-term IDR – at «B», and the forecast for the credit rating as “negative”. This is stated in the agency’s report.

The agency justifies this with legal, strategic and operational support of the Azerbaijani government. So, Azerbaijan’s credit rating is also confirmed at the level «BB +», and the rating outlook is “negative”.

The report says the government has also acted as a guarantor for 91% of outstanding debts of the company at the end of 2015, excluding accrued interest. The Ministry of Finance is the guarantor of 8.5% of the debt. The agency also notes that the “negative” outlook reflects the outlook on the independent rating of Azerbaijan.

The agency predicts that to meet debt obligations Azerenergy will be forced to seek help from the state. In 2016-2025 the operator will have to pay $ 172 million and 204 million euros. However, the financial position of Azerenergy does not allow it to find the way out of the debt.

* The total external debt of Azerenergy has increased by 1.5 billion manat up to 2.4 billion manat. The reason for the sharp rise in the debt is devaluation of the manat.

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