Fitch: Petkim's foreign debt to significantly reduce in 2021-2022

Fitch Ratings has upgraded Petkim Petrokimya Holdings A.S.'s (Petkim) Long-Term Issuer Default Rating (IDR) to 'B+' from 'B'. The Outlook is Stable.

The upgrade reflects our expectations of strong progress on de-leveraging with around USD 200 million - USD 300 million debt repayment in 2021, followed by payment of a USD 240 million instalment for STAR Refinery in 2022. All this should result in funds from operations (FFO) net leverage being sustainably below 3.0x through to 2024, despite the expected material reduction in earnings in 2022.

Despite forecasts of a significant decline in Petkim's profits in 2022, the leverage is projected at 3 levels by 2024. The agency believes that the rating of Petkim is constrained by its small scale and high product concentration relative to larger, diversified global peers'.

In particular, Petkim owns a single-site petrochemical complex and is exposed to cyclical commodity polymers, which results in inherent earnings volatility. Its business profile benefits from a well-invested asset base and resilience to foreign-exchange (FX) volatility. Its senior unsecured instrument rating is capped at the IDR due to assets being solely located in Turkey.