Page 45 - GEORptNov19

8.4.1​ ​International ratings - specific details of rating actions corp/regional etc
S&P upgrades Georgian Oil and Gas Corporation rating to BB-
S&P Global has raised its rating on Georgian Oil and Gas Corporation's (GOGC) long-term debt by one notch to BB-/stable. The move was in response to past action on the Georgia sovereign rating but also reflected diversification achieved by the construction of a gas-fired plant.
GOGC has the status of National Oil Company, protects state interests in the Production Sharing Agreements signed with investors and is the owner of the main gas pipeline system of Georgia.
It is viewed by the government of Georgia as critical to its national energy policy. GOGC is actively pursuing diversification of its business activities through constructing and operating gas-fired thermal power plants.
S&P said that the rating action on GOGC followed similar action on Georgia. It also reflected the rating agency’s view of a very high likelihood of extraordinary state support for the company and its unchanged stand-alone credit profile (SACP) of 'b+'.
“We believe the commissioning of the Gardabani II power station in late 2019 should help normalize financial metrics following the recent peak in capital expenditure (capex), with debt to EBITDA below 4x and funds from operations (FFO) to debt above 20% already in 2020m” S&P’s press release read.
In the base case for 2019, S&P currently assumed a temporary deterioration in credit metrics, spurred by higher gas purchasing costs versus flat domestic social gas prices and a peak in capex.
For 2019, the rating agency anticipated debt to EBITDA will peak at 4.7x and FFO to debt will decline to 16% (all ratios are on a gross basis). Still, it said it believed the launch of the Gardabani II power station in late 2019 should facilitate a quick recovery in credit metrics. The plant would contribute about GEL70mn ($26mn ) to GOGC's EBITDA starting from 2020, which should allow debt to EBITDA of below 4.0x and FFO to debt exceeding 20% from the same year.
8.5 ​Fixed income
8.5.1​ ​Fixed income - bond news
Georgia’s largest lender TBC issues $300mn in unsecured bonds
Georgia’s TBC Bank, the largest bank in the country on all key metrics, on June 12​ ​announced​ ​that it has successfully priced a debut $300mn, 5-year senior unsecured bonds issue.
Heavily overbooked, the issue was launched with a 5.75% coupon at a 6% yield—which the bank said was the lowest ever yield achieved by a Georgian issuer on the international debt markets.
45​ GEORGIA Country Report​ November 2019 ​ ​www.intellinews.com