Moody’s Confirms UzAuto Motors Rating at Ba3

Tashkent, Uzbekistan (UzDaily.com) — Moody’s Ratings has confirmed the corporate family rating of UzAuto Motors at Ba3 and assigned the same rating to the company’s planned bond issuance, with a stable outlook.

According to Moody’s, the rating confirmation reflects expectations that the upcoming senior unsecured bond placement will enhance UzAuto’s liquidity, assuming a successful issuance of the five-year benchmark bond.

The proceeds from the issuance are intended to repay international and local bank loans and refinance US$300 million in Eurobonds maturing in May 2026. Moody’s expects that if the transaction does not occur, UzAuto will promptly secure alternative financing to meet its debt obligations on time.

The agency notes that the company’s ratings reflect the resilience of its financial performance, despite a temporary decline in sales and EBITDA for the 12 months ending June 2025 and an increase in leverage. These changes are related to UzAuto’s strategic shift to an installment sales model, consistent with Moody’s expectations.

UzAuto remains Uzbekistan’s largest car manufacturer, holding approximately 82% of the domestic passenger car market. During the reporting period, the company produced 378,000 vehicles, generating US$4 billion in revenue and US$471 million in adjusted EBITDA.

To support the new sales model, UzAuto increased borrowings to finance working capital, raising Moody’s-adjusted leverage to 1.6x as of June 30, 2025, compared with 1.3x a year earlier.

Moody’s expects a gradual recovery over the next two years as the transition period concludes and external customer financing programs expand.

The Ba3 rating is based on a baseline credit assessment of b1, Uzbekistan’s sovereign rating at Ba3, UzAuto’s high level of state dependence, and the strong likelihood of government support in case of financial difficulties.

According to Moody’s, the probability of extraordinary support is underpinned by UzAuto’s dominant market position and strategic role in providing affordable vehicles, as well as the automotive sector’s importance to the government’s industrial strategy focused on employment and export development. This is supported by the state’s retention of a controlling stake (99.7%), prior instances of financial support, and existing regulatory measures that maintain UzAuto’s market leadership.

The b1 baseline credit assessment is supported by Uzbekistan’s rapid economic growth, the low saturation of the automotive market, the strategic role of the automotive sector in industrial policy focused on local production and export capacity development, and prudent financial management with strong credit metrics.

Moody’s highlights risks, including UzAuto’s relatively small size compared to global automakers, reliance on the domestic market (about 90% of sales), growing competition from private companies and the BYD EV joint venture, dependence on a licensing agreement with General Motors (Baa2, stable) and its supply chain, and a limited model lineup.

The agency also notes negative free cash flow over the past two years, expected to remain negative in 2025 due to significant working capital needs.

In terms of liquidity, successful bond placement would maintain adequate liquidity over the next 18 months. The proceeds will be used to refinance short-term obligations, including US$300 million in Eurobonds maturing in May 2026. Moody’s forecasts that the company will generate around US$530 million in operating cash flow, which, combined with US$44 million in cash as of June 30, 2025, will cover working capital needs, capital expenditures (US$105 million), and dividend payments in the near term.

UzAuto also has an US$80 million revolving credit line with Kapitalbank (Ba3, positive outlook), expiring in May 2028. The line is fully drawn but expected to be renewed after the bond issuance.

UzAuto’s debt structure includes US$300 million in senior unsecured Eurobonds, pari passu with US$77.2 million in unsecured international bank loans (as of September 2025), secured loans of US$50 million with Ipoteka Bank, and the Kapitalbank revolving line secured by vehicle inventories. Following the new bond issuance, most of the company’s obligations will remain unsecured, explaining the bond rating being aligned with the corporate rating of Ba3.

The stable outlook reflects Moody’s expectation that sales and revenue will stabilize in 2025 following a decline in 2024, and free cash flow will turn positive within 12–18 months. The agency also expects credit metrics to remain resilient, UzAuto to refinance large debts on time, and liquidity to remain adequate.

Moody’s notes that a rating upgrade could occur if Uzbekistan’s sovereign rating and the company’s baseline credit assessment improve, while maintaining a high likelihood of state support. This would require sustained sales growth, increased export share, geographic diversification, leverage (Debt/EBITDA) below 3.5x, retained cash to debt ratio above 30%, and consistently positive free cash flow.

A downgrade could result from a deterioration of the sovereign rating, reduced likelihood of government support, significant sales decline, leverage rising to 4.5x EBITDA, RCF/debt falling to 20%, weakened liquidity, or termination of the GM cooperation after 2027.

UzAuto Motors, 99.7% owned by the Government of Uzbekistan, produces Chevrolet vehicles under a licensing agreement with General Motors valid until 2027.

For the 12 months ending June 30, 2025, the company reported US$4 billion in revenue and US$471 million in adjusted EBITDA from approximately 378,000 vehicles produced, 89% of which were sold domestically and the remainder exported to Kazakhstan, Georgia, Armenia, and Kyrgyzstan.