Fitch lowers Georgian Railway

Fitch Rating said it downgraded Georgian Railways JSC's long-term issuer default ratings to B+ from BB- and removed the ratings from Rating Watch negative.

The outlook is stable.

The downgrade reflects a continued pressure from challenging market environment on railway transportation volumes, leading to deterioration of the company’s credit metrics and a weakening of its standalone profile, Fitch explained.

The company’s moderate links with its indirect sole shareholder, Georgia, have not changed after the elections in October 2016, the agency said, and now underpin the company's ratings at one notch below the sovereign ratings.

The company’s standalone rating now is considered a B rating compared to BB- previously, reflecting the stretched credit metrics, declines in rail transportation volumes and low GDP growth expectations in most countries of the region, Fitch said.

The ratings are constrained by the company’s small scale of operations and its reliance on transit volumes by a single transit route, which heightens event risk, the agency said.

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