Moody's considers SOCAR cash sufficient to cover its debt

The estimated debt maturities of the State Oil Company of Azerbaijan (SOCAR), in 2023-2024 is 11.2 billion manats ($6.588 billion), Report informs referring to Moody's Investors Service.

“The company's liquidity also improved. Its cash balance of AZN12.5 billion ($7.352 billion) as of year-end 2022 and forecasted cash generation of around AZN4.0 billion-AZN5.0 billion over 2023-24 will be sufficient to cover estimated debt maturities of AZN11.2 billion over this period.

The recommendation also reflects the improvement in SOCAR's credit metrics. Its leverage reduced to 1.5x in 2022 from 3.4x in 2021 and 4.9x average in 2017-20, and is likely to remain around this level over the next two years. Moody's-adjusted EBIT/Interest expense improved to 7.6x in 2022 from 3.7x in 2021, 0.8x in 2020 and around 3.0x in 2017-19. Moody's expects interest coverage to remain solid at 5.0x-6.0x in 2023-24,” reads the report.

“In addition, SOCAR's credit quality reflects its key role in the oil and gas sector of Azerbaijan and its importance to the national economy; sustainable hydrocarbon production volumes; and close links with the Azerbaijan government, which has accumulated substantial reserves and should be in a position to provide financial support to the company if needed.”