X-S&P affirms Azerbaijan's SOCAR at 'BB+'; outlook negative

The credit agency said: "The affirmation reflects our view that the SOCAR should be able to maintain ratings-commensurate credit metrics even in the lower oil price environment and that its liquidity should remain sufficient to service its debt and finance its capital expenditure (capex) program.

"In line with international peers, SOCAR is reducing its capital spending, which should allow the company to generate positive free operating cash flow (FOCF). We also expect it will receive continuing ongoing support from the government, which we capture in our business and financial risk, and liquidity assessments, including our expectation that the government will finance part of SOCAR's capex in 2016.

"We now assess the stand-alone credit profile (SACP) on SOCAR at 'bb-', compared with 'bb' previously, as our assessment on both SOCAR's fair business and significant financial risk profiles are no longer at the upper end of the range.

"The rating on SOCAR reflects our view of the "extremely high" likelihood that its owner, the government of Azerbaijan, would provide extraordinary support to the company."