‘We continue to view high risks related to the current capital structure of Azerenerji, since about 85% of the debt portfolio is denominated in foreign currencies and the company remains exposed to the risk of fluctuations of exchange rates. There are no substantial cash flows in foreign currencies to mitigate this risk’, “S&P” reported.
‘We continue to believe that, without ongoing and extraordinary state support, Azerenerji would face difficulties in servicing its debt because of high leverage and enlarged investment needs of about Azerbaijani new manat (AZN) 1 billion ($600 million) in the next three years. We understand that, in line with the government's roadmap for the energy sector, Azerenerji plans large capital expenditures (capex) to improve the quality of its assets following several years of historical underinvestments. At the same time, we see that Azerenerji's cost structure has improved after unbundling, and, under our base case for 2018, we assume the entity will generate stable funds from operations (FFO) compared with 2017, at a level almost 2x higher than 2015 (before the unbundling)’, the agency said.