Fitch Revises Aragvi's Outlook to Stable; Affirms 'B' Rating with a Positive Outlook
Fitch Revises Aragvi's Outlook to Stable; Affirms 'B' Rating with a Positive Outlook
06.03.2023
Fitch Ratings has revised the Outlook on Aragvi Holding International Limited's (Trans-Oil Group) Long-Term Foreign Currency (FC) Issuer Default Rating (IDR) to Stable from Positive. Fitch has affirmed the Long-Term Local Currency (LC) IDR at 'B' with a Positive Outlook.
The revision of the Outlook on the FC IDR reflects the low likelihood of the rating being upgraded if the LC IDR was upgraded due to increased operating environment risks in the Republic of Moldova.
The Positive Outlook on LC IDR reflects Trans-Oil's improved business profile and Fitch's expectation that leverage will stay below its positive rating sensitivity, despite projected normalization in EBITDA in the fiscal year ending June 2023 (FY23) and the higher cost of funding related to important working capital facilities. Visibility of the Group's EBITDA on a sustained basis together with confirmation of a conservative financial policy would be the prerequisites for an upgrade of the LC IDR.
Trans-Oil's 'B' IDR continues to benefit from the company's dominant and well-protected market position in agricultural exports and sunflower seed crushing in Republic of Moldova and superior EBITDA margin compared with larger peers. Fitch Ratings believe that a lower harvest in Republic of Moldova in FY23 could be compensated by procurement from Ukraine, which has export capacity constraints due to the ongoing conflict with Russia.
