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Fitch Assigns Georgian Railway's USD500m Green Bond Final 'BB-' Rating

60cb366e540e6
BM.GE
17.06.21 16:00
561
Fitch Ratings has assigned JSC Georgian Railway's (GR; BB-/Negative) USD500 million senior unsecured fixed coupon (4.00%) green Eurobond due 17 June 2028 a final long-term rating of 'BB-'.

The proceeds from the issuance will be primarily used to refinance GR's existing 7.75% senior unsecured US dollar-denominated notes due 2022 and to finance GR's infrastructural projects.

The company positions the issued Eurobond as eligible for green financing as an amount equal to the net proceeds of the notes will be used to finance or refinance one or more eligible projects as described in the GR's Green Bond Framework.

The Eurobond's 'BB-' rating is equalised with GR's IDR as it is a direct, unconditional senior unsecured obligation of the company, which ranks pari passu with all its other present and future unsecured and unsubordinated obligations.

GR is Georgia's monopolistic integrated railway group. It is wholly-owned by the state via national key assets manger - JSC Partnership Fund, with core business in freight transit operations.

Fitch classifies GR as an entity ultimately linked to Georgia (BB/Negative) under its Government-Related Entities (GRE) Rating Criteria and applies a top-down approach based on its assessment of the strength of linkage with and incentive to support by the Georgian state. Fitch assesses the GRE support score at 22.5, reflecting a combination of a 'Strong' assessment for status, ownership and control and financial implications of default, and 'Moderate' assessment for support track record and socio-political implications of default.

GR's Standalone Credit Profile (SCP) is 'b+', which reflects a 'Weaker' assessment for revenue defensibility, 'Midrange' assessment for operating risk, and 'Weaker' financial profile with leverage (Fitch's net adjusted debt to EBITDA) approaching 6.5x in our rating case scenario at end-2024. The combination of the assessment of strength of links with the state and SCP assessment under Fitch's Public Sector, Revenue-Supported Entities Rating Criteria leads to GR's IDRs being notched down by a single notch from Georgia's IDRs. The Negative Outlook on GR's ratings mirrors that on the sovereign.