Today.Az » Business » Fitch affirms SOCAR at 'BBB-'; Outlook Stable
19 May 2011 [11:20] - Today.Az
Fitch Ratings has affirmed State Oil Company of the Azerbaijan Republic's (SOCAR) Long-term foreign currency Issuer Default Rating (IDR) at 'BBB-' and Short-term foreign currency IDR at 'F3'. The Outlook for the Long-term IDR is Stable.
The rating actions reflect the agency's affirmation of Azerbaijan's Long-term foreign and local currency IDRs at 'BBB-', respectively, and Short-term foreign currency IDR at 'F3' on 17 May 2011. The agency has revised the Outlooks on Azerbaijan's Long-term foreign and local currency IDRs to Positive from Stable (for further information, see 'Fitch Revises Azerbaijan's Outlook to Positive; Affirms at 'BBB-', dated 17 May 2011, at www.fitchratings.com.)
In line with Fitch's "Parent and Subsidiary Rating Linkage" methodology, SOCAR's ratings benefit from the group's relatively strong strategic and operational ties with the parent (state of Azerbaijan 'BBB-'/Positive/'F3'). This is underpinned by the importance of the oil and gas sector to the Azerbaijan's economy, and the company's status as an agency representing the state's interests in this industry (oil and gas accounted for 51% of the country's GDP and 90% of its total exports in 2010).
In Fitch's view, although SOCAR continues to benefit from relatively strong links with the Azerbaijan state, and one loan from the state-owned International Bank of Azerbaijan (IBD; 'BBB-'/RWN) representing around 26% of its total debt is currently guaranteed by the government, the agency does not view this as significant enough to allow a continued rating alignment with the sovereign's ratings. Therefore, the Outlook on SOCAR's Long-term IDR remains Stable although the Outlooks on Azerbaijan's Long-term IDRs have been revised to Positive. Fitch views SOCAR's standalone rating to be commensurate with the 'BB' rating category.
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