S&P upgrades AzerEnergy's standalone credit profile

Azerbaijan's leading energy operator, AzerEnergy, has received a significant boost in its credit ratings from S&P Global Ratings, affirming its long-term and short-term issuer credit ratings at BB/B with a stable outlook.

The upgrade reflects AzerEnergy's robust financial performance amidst a challenging global energy landscape, Caliber.Az reports citing local media.

According to AzerEnergy, S&P has revised the company's standalone credit profile (SACP) from b- to b, attributing the improvement to consistently strong financial metrics. Notably, the adjusted ratio of funds from operations (FFO) to debt is projected to remain above 30 per cent from 2024 onwards, underscoring financial stability.

The agency highlighted AzerEnergy's resilience during recent energy crises and inflationary pressures, emphasizing that the company has navigated these challenges effectively, benefiting from elevated electricity prices and increased exports, particularly to Türkiye.

This performance contrasts with difficulties faced by many utility firms globally amid the Russia-Ukraine conflict.

S&P's stable outlook for AzerEnergy's rating mirrors Azerbaijan's sovereign rating outlook, with expectations of continued government support. The agency anticipates ongoing backing for AzerEnergy's substantial investment initiatives and assurance of liquidity needs, underscoring its critical role in the Azerbaijani economy.

Despite risks such as foreign exchange volatility and challenges in the domestic banking sector, S&P believes these are mitigated by strong government support. AzerEnergy has historically received capital injections, debt service support, tax incentives, and dividend waivers, reinforcing its strategic importance to Azerbaijan's economic and social fabric.