2024-08-16 14:35:37
Fitch Ratings has upgraded the long-term issuer default rating (IDR) and senior unsecured rating of the State Oil Company of the Azerbaijan Republic (SOCAR) from “BB+” to “BBB-“, Day.Az reported on Friday, citing the rating agency.
The Outlook on the Long-Term IDR is Stable.
“SOCAR is wholly state-owned and its rating is equalized with that of Azerbaijan (BBB-/Stable) under Fitch’s Government-Related Entities (GRE) rating criteria. This is underpinned by the state support provided to the company in the form of financial guarantees, cash contributions and equity injections, as well as SOCAR’s social functions and its importance as a state instrument for the development of oil and gas projects,” Fitch said.
As noted, the government has historically provided significant financial support, such as capital injections and debt guarantees (4% of SOCAR’s debt at the end of 2023 was guaranteed by the state).
“SOCAR’s financial profile remains strong, thanks to favorable oil and gas prices, limiting the need for government support. However, we believe that the government will provide SOCAR with direct financial support if necessary,” the rating agency said.
Fitch notes SOCAR’s important role in Azerbaijan’s economy as an oil and gas producer and a domestic seller of petroleum products, and its involvement in important energy projects such as the Southern Gas Corridor, which are vital to the country’s strategic interests and energy security.
“SOCAR also holds shares and represents the government in various joint ventures in the oil and gas sector, which are vital to the country’s hydrocarbon production. SOCAR is the largest employer, taxpayer and state instrument for the development of the oil and gas industry in the country,” the rating agency said.
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