ECONOMY
Fitch revises outlook on Azerenerji to stable; affirms Azernerji & SOCAR at `BBB-`
Baku, June 18 (AZERTAC). Fitch Ratings has revised the Outlook on OJSC Azerenerji`s (Azerenerji) Long-term foreign currency Issuer Default Rating (IDR) to Stable from Positive and affirmed the rating at `BBB-`. Fitch has also affirmed State Oil Company of the Azerbaijan Republic`s (SOCAR) Long-term foreign currency IDR at `BBB-` with a Stable Outlook. A full rating breakdown is below.
The revision of Azerenerji`s Outlook to Stable reflects the agency`s revision of the Outlook on the Republic of Azerbaijan`s Long-term foreign IDR to Stable from Positive on 11 May 2012 (see `Fitch Revises Azerbaijan`s Outlook to Stable; Affirms at `BBB-" at www.fitchratings.com). The revision of the Outlook on the sovereign rating, and consequently Azerenerji`s rating, better reflects Fitch`s view on their likely direction.
Azerenerji`s ratings are aligned with the Republic of Azerbaijan (`BBB-`/Stable/`F3`) reflecting strong legal, strategic and operational ties with the government of Azerbaijan. At YE11 87.1% of the company`s debt was guaranteed by the government.
Fitch previously de-aligned the ratings of SOCAR from those of Azerbaijan at a hypothetical sovereign rating level above `BBB-`, largely due to the relatively insignificant direct government guarantees for SOCAR`s debt. At the current `BBB-` sovereign rating level, Fitch assesses government ties with SOCAR as strong. Fitch continues to view SOCAR`s standalone business and financial profile as commensurate with the `BB` rating category.
The rating actions are as follows.
Azerenerji: Long-term foreign currency IDR: affirmed at `BBB-`; Outlook revised to Stable from Positive
Short-term foreign currency IDR: affirmed at `F3`
SOCAR: Long-term foreign currency IDR: affirmed at `BBB-`; Stable Outlook
Short-term foreign currency IDR: affirmed at `F3`;
Senior unsecured rating: affirmed at `BBB-`