Fitch gives BBB- rating to Azerbaycan Demir Yollari

Fitch Ratings said it assigned a BBB- long-term issuer default rating to Azerbaycan Demir Yollari CJSC (Azerbaijan Railways). The outlook is stable.

The rating is aligned with that of Azerbaijan (BBB-/stable), the company's 100% shareholder. The agency said its assessment considers Azerbaycan Demir Yollari's high strategic importance to the national economy and its strong operational links with Azerbaijan due to the government's involvement in tariff setting, capex planning and funding, financial and business strategy and policy setting. Fitch noted that the company's debt is not guaranteed by the government.

Fitch assesses Azerbaycan Demir Yollari's standalone credit profile as low in the BB rating category. This is supported by its monopoly position, healthy profit margins and the integrated nature of its business, the agency said. However, its small size compared to some regional railway groups and exposure to higher event risk stemming from its concentration on two key routes and geopolitical events constrain the ratings, in Fitch's view.

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