Fitch keeps Uzbekhydroenergo rating at BB, changes outlook to Stable

Fitch attributes the outlook change to a revision of its methodology for evaluating government-related entities. The agency will no longer automatically link the company's rating to the sovereign rating of Uzbekistan, as it expects a gradual decline in the share of its debt backed by state guarantees. Fitch forecasts that around 75% of the debt will be covered by guarantees in 2026–2028. At the same time, the agency raised its government support score from 20 to 30 points.

The standalone credit profile remained at b+. Excluding the country's operating environment, it would have corresponded to the bb- level, which is one notch higher. Fitch cites Uzbekhydroenergo's monopoly position in the country's hydropower sector, high operating profitability, expanding operations, and prudent debt management as its strengths. The profile is constrained by insufficiently predictable tariff regulation and the assessment of the operating environment in Uzbekistan.

According to investment plans, the company's capital expenditures in 2027–2029 could average 3.7 trillion soums (around $310 million) per year, compared to roughly 2.4 trillion soums (around $200 million) in 2024–2026. The company intends to keep its net debt-to-EBITDA ratio around 3.0x, not exceeding 3.5x. The agency forecasts negative free cash flow in 2026–2029 and points to foreign exchange risk: the debt is almost entirely in foreign currency, most of the revenue is generated in soums, and no hedging is used.