"Fitch" assigns SOCAR's new bond issue at 'BBB-' rating

Baku. March 18. REPORT.AZ/ "Fitch Rating" international agency affirmed the upcoming bond issue of State Oil Company of Azerbaijan (SOCAR) in the amount of 750 million USD at the rating of "BBB". Unsecured bonds in US dollars will be in circulation till 2030.

Report informs, it was noted in a statement of the agency that SOCAR's ratings are aligned with Azerbaijan's (BBB / Stable) as it represents the state's interests in the strategically important oil and gas industry. In addition, SOCAR is working closely with the State Oil Fund of Azerbaijan (SOFAZ) to make financial and investment decisions.

It was also noted that SOCAR agreed funding for the 10 million ton STAR refinery in Turkey and it received commitments to cover the unpaid equity portion in the amount of 1.4 billion USD of the 5.6 billion USD project from the international banks. SOCAR expects to make an additional 800 million USD equity contribution related to its 60% stake in the project, which is scheduled to be completed in 2017.

The agency forecasted higher natural gas production from Azerbaijan's PSAs, in particular the Stage 2 of the Shah Deniz PSA and once completed, the project aims to increase production by 16 billion cubic meters of gas and 4 million tons of gas condensate starting from late 2018.

"Fitch" estimated that SOCAR will spend around 2.2 billion USD on capex in 2015-2016. Most funds are earmarked to complete the current project, including the construction of the STAR refinery. "Fitch" agency forecasted that the oil price will be 55 USD per barrel in 2015 and 65 USD in 2016, SOCAR's FFO net leverage could exceed two times.