Page 72 - GEORptNov21

9.2.6 Utilities corporate news
Fitch affirms Georgia Global Utilities at B+, outlook stable
Fitch Ratings has affirmed Georgia Global Utilities JSC (GGU) Long-Term Issuer Default Rating (IDR) at 'B+'. The outlook is Stable. Fitch has also affirmed GGU's senior unsecured rating at 'B+' with a Recovery Rating (RR) of 'RR4'.
The affirmation reflects GGU's consolidated credit profile of its regulated water utility business (Georgian Water and Power LLC, GWP), and its higher-risk renewable electricity business, which is nevertheless supported by long-term power purchase agreements (PPAs). Overall size, asset quality, forex (FX) risk, the operating and regulatory environment, and high, albeit decreasing, leverage remain key rating constraints.
Fitch expects GGU's EBITDA margin in 2021 and 2022 to significantly improve toward 63%, from a low of 56% in 2020. The rating agency forecast GGU's profit to be supported by the higher-than-expected water tariff increases. The approved water tariffs for 2021-2023 increase allowed revenue by about 36% in comparison with the previous regulatory period for the entire water segment. As a result, Fitch expected funds from operations (FFO) net leverage to return to below the negative rating sensitivity in 2022-2023.
The pandemic affected GGU's revenue and Ebitda, while lower demand from business customers contributed to the decline for the water segment.
72 GEORGIA Country Report November 2021 www.intellinews.com