TASHKENT

Uzbekistan’s state-owned Uzavtosanoat Holding plans to allocate $427.7 million to launch the production of new Chevrolet models, Onix and Tracker, on the basis of the UzAuto Motors plant, the largest car manufacturer in Central Asian country.

The project which has been tasked by the country’s President Shavkat Mirziyoyev is expected to be launched in September 2022 and envisages the production of 190,000 cars per year.

The car engine manufacturer, the UzAuto Motors Powertrain plant, is set to start production of 185,000 engines per year for new car models. An additional $190.8 million will be allocated to launch this production in 2022-2023.

UzAuto Motors, part of Uzavtosanoat Holding, produces Chevrolet cars in an alliance with General Motors and its annual production capacity is around 300,000 vehicles. In 2020, the plant produced a record 280,000 cars despite the global crisis in the automotive industry. The company’s sales volume increased by 5 percent year-on-year in 2020, although revenue deteriorated by single digits in U.S. dollar terms due to local currency devaluation.

The company, which plays a dominant role in the country’s car producing market and, according to market participants, enjoys the government’s preferential treatment, exports cars to neighbouring countries, as well as to Russia and Ukraine.

In May, Fitch Ratings has assigned UzAuto Motors’ (UAM; B+/Stable) $300 million senior unsecured Eurobond due 2026 a final senior unsecured ‘B+’ rating, the recovery rating is ‘RR4’/50 percent.

The company issued $300 million worth of Eurobonds of the RegS/144A format with a maturity of five years on the London Stock Exchange in April.

Orders totalled $1.4 billion and the final coupon rate was set at 4.85 percent, down from an initial 5.375 percent. Eurobonds were distributed to almost 130 investors from the UK (37 percent), the U.S. (14 percent), Germany (8 percent) and a number of other European (35 percent) and Asian (6 percent) countries.

The majority of investors were asset managers and funds (67 percent), which were also actively distributed between banks (23 percent) and insurance and pension funds (10 percent).

The issue’s underwriting banks were leading international banks such as Citi (USA), MUFG (Japan), Natixis (France) and Raiffeisen Bank International (Austria).

The proceeds from the notes are being used by UzAuto Motors for general corporate purposes.

Fitch said that it had viewed the status, ownership and control linkage of UzAuto Motors with the state as ‘Strong’ due to full state ownership and operational control by the parent over the company’s Capex and operational strategy.

The agency assessed the financial implications of UzAuto Motors default as ‘Moderate’ as “believed it would have a moderate impact on the availability of financing for the government and other government-related entities”.