...Slowing Economy and FX Volatility May Put Pressure on Financial Profiles Over 5M15 freight rail transportation volumes continued to decline in most former Soviet Union (FSU) countries by about 2%-12% yoy. Since December 2014, Fitch has revised downwards its 2015 GDP expectations for Azerbaijan, Georgia, Kazakhstan and Ukraine. We expect rail volumes to remain weak in 2H15 on the back of lower GDP growth across the region as well as competitive pressure from other means of transport, especially for crude oil, following redirection of it to pipelines. Georgian Railways' (GR) and Kazakhstan Temir Zholy's (KTZ) oil transportation volumes continued to decline in 5M15. What to Watch FX: Rated transport companies are subject to FX volatility due to large foreign-currency borrowings. But FX risks are partly mitigated by natural hedges as in most cases tariffs are either linked to (Lemtrans) or denominated in US dollars (GR and Azerbaijan Railways (AR)), and by some cash holdings in foreign currencies....
