Tashkent, Uzbekistan (UzDaily.com) -- S&P Global Ratings today said that it has assigned its 'BB-' rating to the proposed senior unsecured notes to be issued by Uzbekistan-based Uzbekneftegaz JSC (BB-/Stable/--). 

Despite significant potential structural subordination in the capital structure (about 60% of debt is issued by subsidiary, GTL), we aligned the rating on the notes with the long-term issuer credit rating. This is because we believe the government may intervene in the event of a bankruptcy process, since we assess Uzbekneftegaz as one of the most important state-owned corporations in Uzbekistan and closely affiliated with the government, reflecting its role as provider of gas and liquid hydrocarbons at relatively low tariffs to the domestic economy.

We understand that Uzbekneftegaz will use the proceeds of the notes mainly to refinance maturing debt and finance its sizeable capital investments program. This relates mainly to the Shurtan Gas Chemical Complex expansion, which envisages a production increase of up to 400,000 metric tons (mt) of polyethylene and 100,000 mt of polypropylene, estimated to start operating in 2024, adding as much as $200 million of EBITDA annually.