National Oil Co. Uzbekneftegaz Outlook Revised To Negative On Weak Performance And Liquidity Pressure; Affirmed At 'BB-'

Uzbekneftegaz's operating performance weakened after the state lowered the gas tariff in the second half of 2021 and the gas-to-liquids (GTL) plant was delayed, resulting in funds from operations (FFO) to debt of 6.8% in 2021 and 5.4% in the first half of 2022, which are materially lower than our minimum threshold of 12% for the current rating. We also note a deterioration of liquidity since cash flows are lower than expected and do not fully cover debt of almost $500 million maturing over the next 12 months and $450 million in the subsequent 12 months, although the company is currently working on financial arrangements. Still, we understand that, after almost a year of delays, the GTL plant is finally

...December 15, 2022 - Uzbekneftegaz's operating performance weakened after the state lowered the gas tariff in the second half of 2021 and the gas-to-liquids (GTL) plant was delayed, resulting in funds from operations (FFO) to debt of 6.8% in 2021 and 5.4% in the first half of 2022, which are materially lower than our minimum threshold of 12% for the current rating. - We also note a deterioration of liquidity since cash flows are lower than expected and do not fully cover debt of almost $500 million maturing over the next 12 months and $450 million in the subsequent 12 months, although the company is currently working on financial arrangements. - Still, we understand that, after almost a year of delays, the GTL plant is finally ramping up and the gas tariff was raised to the previously expected level in September 2022, which should support cash flow generation and lead to improved liquidity and credit metrics. - We have revised our outlook to negative from stable and affirmed our '##-' rating...

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