TBILISI

(Read the full report on fitchratings.com)

Fitch Ratings has assigned JSC Georgian Railway’s $500 million senior unsecured 4 percent fixed coupon green Eurobond a final long-term rating of ‘BB-‘.

The new bonds are due on 17 June 2028. State-run Georgian Railway plans to use the proceeds from the issuance to refinance its existing 7.75 percent senior unsecured U.S. dollar-denominated $500 million notes due in 2022, and to finance the company’s infrastructure projects.

The company positions the issued Eurobond as eligible for green financing. This means 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 Georgian Railway’s Green Bond Framework.

The Eurobond’s ‘BB-‘ rating is equalised with Georgian Railway’s IDR as it is a direct, unconditional senior unsecured obligation of the company, which ranks on the same footing as with all its other present and future unsecured and unsubordinated obligations.

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

Fitch classified Georgian Railway as an entity ultimately linked to Georgia (rated 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 assessed 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 a ‘Moderate’ assessment for support track record and socio-political implications of default.

Georgian Railway’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 approaching 6.5x at the end of 2024, Fitch said.

“The combination of the assessment of the strength of links with the state and SCP assessment under Fitch’s Public Sector, Revenue-Supported Entities Rating Criteria leads to Georgian Railway’s IDRs being notched down by a
single notch from Georgia’s IDRs,” the agency said in a statement.

In November 2020, Fitch affirmed Georgian Railway’s long-term foreign- and local-currency Issuer Default Ratings at ‘BB-‘ with Negative Outlooks.