Moody’s completes periodic review of SOCAR ratings

Moody’s Ratings has completed a periodic review of the ratings of the State Oil Company of the Azerbaijan Republic (SOCAR), leaving the company’s ratings unchanged, according to the agency. 

The agency said the review was conducted by a rating committee, which reassessed the rationale for the existing ratings based on the applicable methodology and recent developments. Moody’s stressed that the review does not constitute a rating action and does not indicate that a rating action is likely in the near future. 

SOCAR’s long-term issuer rating remains at Baa3 with a stable outlook. Under Moody’s Government-Related Issuers methodology, the rating reflects the company’s ba2 Baseline Credit Assessment (BCA), Azerbaijan’s Baa3 sovereign rating, the very high default dependence between SOCAR and the government, and a high likelihood of extraordinary state support if needed. 

According to Moody’s, SOCAR’s ba2 BCA is supported by its strategic role in Azerbaijan’s oil and gas sector, its importance to the national economy, solid financial performance, strong credit metrics and close ties with the Azerbaijani government. At the same time, the agency said the company’s credit profile is constrained by declining hydrocarbon production, exposure to oil price volatility, increasing merger and acquisition activity, corporate governance considerations and the concentration of operations in Azerbaijan. 

N. Tebrizli