According to the agency, Azerenerji's ratings continue to be aligned with those of its sole shareholder, the Republic of Azerbaijan, reflecting the strong legal, operational and strategic ties between the company and the state. The rating alignment reflects state guarantees for the majority of Azerenerji's outstanding debt at end-2015, the company's strategic importance to the Azerbaijani economy and strong operational links, including tariff and capex approval by the government, as well as a track record of direct tangible state support. Given Azerenerji's unsustainable standalone profile, we expect it to receive state guarantees for any new, currently unplanned, debt. State guarantees for Azerenerji's debt are included in the government's debt and the government has sufficient resource to meet its obligations to Azerenerji and its creditors.
Fitch assumes that the share of state-guaranteed debt will remain fairly stable over 2016-2018 and it does not expect any significant changes to the legal links with the state in the foreseeable future, as there are no plans at present to privatise Azerenerji.