Ranking Motion: Moody’s assigns B2 ranking to JSC Georgia Capital’s $50 million notes, outlook stableGlobal Credit score Analysis – 08 Mar 2021Frankfurt am Fundamental, March 08, 2021 — Moody’s Buyers Service (“Moody’s”) has right this moment affirmed JSC Georgia Capital’s (‘GCAP’) likelihood of default and company household ranking at B2-PD and B2 respectively. Concurrently the company has affirmed the B2 instrument ranking of the $300 million of senior unsecured notes issued by GCAP and assigned a B2 ranking to the $50 million faucet below the present notes. The outlook has been modified to secure from damaging.RATINGS RATIONALEThe affirmation of GCAP’s ranking at B2 and the change in outlook to secure was prompted by (i) the fabric enchancment in working efficiency of GCAP’s underlying investments in the course of the second half of calendar yr 2020, (ii) a major discount in market worth leverage, (iii) a disciplined capital allocation in the course of the pandemic, and a (iv) a stronger enterprise outlook for the following 12 to 18 months than again in June 2020 after we revised our outlook to damaging.The working efficiency of all of GCAP’s underlying investments aside from the water utility enterprise recovered sharply in the course of the second half of 2020. The development in working efficiency was each pushed by increased income and improved profitability. On the aggregated degree, GCAP’s non-public portfolio of investments posted income progress of 4.7% in Q3 2020 and 5.1% in This autumn 2020 respectively. Aggregated EBITDA of personal investments grew 4.5% in Q3 2020 and 1% in This autumn 2020. GCAP’s water utility enterprise posted a 14.9% / 28.2% decline in income in Q3 / This autumn 2020 respectively on account of weak consumption from company shoppers and low water inflows on the Zhinvali reservoir. We positively notice the brand new regulatory water tariff for the interval 2021 to 2032 that can permit as much as 38% enhance in allowed income from water gross sales.The sturdy enchancment in profitability in H2 2020 alongside an enchancment in valuation multiples according to the broader market and the change supply for GHG led to a major enchancment in GCAP’s gross asset values. Gross asset worth elevated to GEL 2.9 billion in December 2020 from GEL1.8 billion in March 2020 with the revaluation of GHG and the rise in GCAP’s stake on this asset submit change supply accounting for the most important share of enchancment (GEL563 million constructive impression on GAV). Market worth leverage additionally improved markedly to round 30% in December 2020 from 47% in March 2020 (40% professional forma of the change supply and pre revaluation) as GCAP considerably decreased its capital allocation to guard its stability sheet because the begin of the pandemic. GCAP’s MVL of 30% presents adequate headroom compared to our downgrade set off of 40% and likewise in opposition to the danger of a deterioration in valuation multiples throughout the broader market over the following 12 to 18 months.GCAP has swiftly reacted to the coronavirus pandemic by adjusting its capital allocation and by specializing in decreasing its working bills. GCAP made investments of GEL 195 million in 2020 (together with GEL138 million of non-cash capital allocation), a major discount compared to the investments of GEL 358 million made in 2019. Working bills had been decreased to GEL32.1 million in 2020 (together with share primarily based funds) from GEL34 million in 2019. GCAP has confirmed in its This autumn earnings name that capital allocation in 2021 will stay at a low degree. We count on GCAP to allocate round $35 million of the bond proceeds to investments for its training and renewable power enterprise. The rest can be saved on stability sheet to strengthen the group’s liquidity profile. That is essential within the context of a nonetheless weak dividend cowl, albeit we count on dividend distribution to enhance going ahead as its investments proceed to learn from bettering working circumstances.The enterprise outlook for GCAP’s underlying investments is extra settled than it was again in June 2020 after we modified the outlook to damaging. Georgia has seen a constant discount in coronavirus infections since a peak reached early December 2020. This has enabled a gradual reopening of the economic system. Preliminary information from the Nationwide Statistics Workplace signifies that Georgia’s economic system shrank by 6.1% in 2020, as the worldwide coronavirus pandemic weighed on the nation’s small, open economic system. Going ahead, our sovereign crew expects gradual reopening of Georgia’s borders – quarantine free journey is presently solely out there to 3 member states of the European Union (Aaa secure) – mixed with a major base impact, to drive a partial restoration in actual GDP progress of round 4.8% in 2021.LIQUIDITYGCAP’s liquidity is sufficient. GCAP had GEL 284 million ($86 million) of liquidity (together with money, loans issued and marketable securities) on stability sheet at year-end 2020 (21% decline y-o-y) primarily on account of a decrease dividend stream (GEL30 million dividend earnings versus GEL122 million in 2019). The money place compares to working bills of GEL 30 million p.a. and web curiosity expense of round GEL40 million p.a. GCAP has no short-term maturities and expects dividend earnings of at the least GEL60 million in 2021.The liquidity at underlying investments elevated sharply in 2020 to GEL392 million at year-end 2020 from GEL183 million at year-end 2019. This was supported by sturdy underlying working money circulate era (GEL376 million working money circulate in FY20 versus GEL230 million in FY19) and the issuance of a inexperienced bond on the utilities enterprise. There aren’t any materials short-term maturities at portfolio degree that can not be coated from money on stability sheet.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSPositive stress on the ranking just isn’t anticipated within the short-term as a result of remaining uncertainties associated to coronavirus pandemic. Long run constructive stress may come up if JSC Georgia Capital would display a chronic monitor document of efficiently managing a portfolio of investments with a superb stability between defensive / progress investments in addition to between listed / non-public property while producing worth. We might count on the issuer to keep up a market worth leverage of under 35% always in the course of the market cycle and an curiosity cowl sustainably nicely in extra of two.0x to think about a better ranking. The upkeep of a robust liquidity place over time would even be a requirement for a better ranking.Damaging stress would come up on the ranking if JSC Georgia Capital fails to keep up its MVL under 40% and if its curiosity cowl would stay sustainably under 2.0x resulting in a deterioration of Georgia Capital’s liquidity place. Any money calls or help necessities for underlying investments would additionally result in damaging stress on Georgia Capital’s ranking.PRINCIPAL METHOOLOGYThe principal methodology utilized in these rankings was Funding Holding Firms and Conglomerates printed in July 2018 and out there at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1125855. Alternatively, please see the Ranking Methodologies web page on www.moodys.com for a duplicate of this technique.REGULATORY DISCLOSURESFor additional specification of Moody’s key ranking assumptions and sensitivity evaluation, see the sections Methodology Assumptions and Sensitivity to Assumptions within the disclosure type. Moody’s Ranking Symbols and Definitions will be discovered at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For rankings issued on a program, sequence, class/class of debt or safety this announcement offers sure regulatory disclosures in relation to every ranking of a subsequently issued bond or notice of the identical sequence, class/class of debt, safety or pursuant to a program for which the rankings are derived solely from present rankings in accordance with Moody’s ranking practices. For rankings issued on a help supplier, this announcement offers sure regulatory disclosures in relation to the credit standing motion on the help supplier and in relation to every explicit credit standing motion for securities that derive their credit score rankings from the help supplier’s credit standing. For provisional rankings, this announcement offers sure regulatory disclosures in relation to the provisional ranking assigned, and in relation to a definitive ranking which may be assigned subsequent to the ultimate issuance of the debt, in every case the place the transaction construction and phrases haven’t modified previous to the project of the definitive ranking in a way that might have affected the ranking. For additional data please see the rankings tab on the issuer/entity web page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit score help from the first entity(ies) of this credit standing motion, and whose rankings might change on account of this credit standing motion, the related regulatory disclosures can be these of the guarantor entity. Exceptions to this strategy exist for the next disclosures, if relevant to jurisdiction: Ancillary Companies, Disclosure to rated entity, Disclosure from rated entity.The rankings have been disclosed to the rated entity or its designated agent(s) and issued with no modification ensuing from that disclosure.These rankings are solicited. Please seek advice from Moody’s Coverage for Designating and Assigning Unsolicited Credit score Rankings out there on its web site www.moodys.com.Regulatory disclosures contained on this press launch apply to the credit standing and, if relevant, the associated ranking outlook or ranking overview.Moody’s common ideas for assessing environmental, social and governance (ESG) dangers in our credit score evaluation will be discovered at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The World Scale Credit score Ranking on this Credit score Ranking Announcement was issued by considered one of Moody’s associates exterior the UK and is endorsed by Moody’s Buyers Service Restricted, One Canada Sq., Canary Wharf, London E14 5FA below the regulation relevant to credit standing businesses within the UK. Additional data on the UK endorsement standing and on the Moody’s workplace that issued the credit standing is out there on www.moodys.com.Please see www.moodys.com for any updates on adjustments to the lead ranking analyst and to the Moody’s authorized entity that has issued the ranking.Please see the rankings tab on the issuer/entity web page on www.moodys.com for added regulatory disclosures for every credit standing. Stanislas Duquesnoy Senior Vice President Company Finance Group Moody’s Deutschland GmbH An der Welle 5 Frankfurt am Fundamental 60322 Germany JOURNALISTS: 44 20 7772 5456 Consumer Service: 44 20 7772 5454 Anke Rindermann Affiliate Managing Director Company Finance Group JOURNALISTS: 44 20 7772 5456 Consumer Service: 44 20 7772 5454 Releasing Workplace: Moody’s Deutschland GmbH An der Welle 5 Frankfurt am Fundamental 60322 Germany JOURNALISTS: 44 20 7772 5456 Consumer Service: 44 20 7772 5454 © 2021 Moody’s Company, Moody’s Buyers Service, Inc., Moody’s Analytics, Inc. and/or their licensors and associates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY’S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.All data contained herein is obtained by MOODY’S from sources believed by it to be correct and dependable. Due to the opportunity of human or mechanical error in addition to different elements, nonetheless, all data contained herein is supplied “AS IS” with out guarantee of any variety. MOODY’S adopts all essential measures in order that the data it makes use of in assigning a credit standing is of adequate high quality and from sources MOODY’S considers to be dependable together with, when applicable, unbiased third-party sources. Nevertheless, MOODY’S just isn’t an auditor and can’t in each occasion independently confirm or validate data obtained within the ranking course of or in getting ready its Publications.To the extent permitted by regulation, MOODY’S and its administrators, officers, workers, brokers, representatives, licensors and suppliers disclaim legal responsibility to any individual or entity for any oblique, particular, consequential, or incidental losses or damages in anyway arising from or in reference to the data contained herein or the usage of or lack of ability to make use of any such data, even when MOODY’S or any of its administrators, officers, workers, brokers, representatives, licensors or suppliers is suggested prematurely of the opportunity of such losses or damages, together with however not restricted to: (a) any lack of current or potential earnings or (b) any loss or injury arising the place the related monetary instrument just isn’t the topic of a specific credit standing assigned by MOODY’S.To the extent permitted by regulation, MOODY’S and its administrators, officers, workers, brokers, representatives, licensors and suppliers disclaim legal responsibility for any direct or compensatory losses or damages precipitated to any individual or entity, together with however not restricted to by any negligence (however excluding fraud, willful misconduct or another kind of legal responsibility that, for the avoidance of doubt, by regulation can’t be excluded) on the a part of, or any contingency inside or past the management of, MOODY’S or any of its administrators, officers, workers, brokers, representatives, licensors or suppliers, arising from or in reference to the data contained herein or the usage of or lack of ability to make use of any such data.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.Moody’s Buyers Service, Inc., a wholly-owned credit standing company subsidiary of Moody’s Company (“MCO”), hereby discloses that the majority issuers of debt securities (together with company and municipal bonds, debentures, notes and business paper) and most popular inventory rated by Moody’s Buyers Service, Inc. have, previous to project of any credit standing, agreed to pay to Moody’s Buyers Service, Inc. for credit score rankings opinions and providers rendered by it charges starting from $1,000 to roughly $5,000,000. MCO and Moody’s Buyers Service additionally keep insurance policies and procedures to deal with the independence of Moody’s Buyers Service credit score rankings and credit standing processes. Data relating to sure affiliations that will exist between administrators of MCO and rated entities, and between entities who maintain credit score rankings from Moody’s Buyers Service and have additionally publicly reported to the SEC an possession curiosity in MCO of greater than 5%, is posted yearly at www.moodys.com below the heading “Investor Relations — Company Governance — Director and Shareholder Affiliation Coverage.”Further phrases for Australia solely: Any publication into Australia of this doc is pursuant to the Australian Monetary Companies License of MOODY’S affiliate, Moody’s Buyers Service Pty Restricted ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as relevant). This doc is meant to be supplied solely to “wholesale shoppers” inside the that means of part 761G of the Firms Act 2001. By persevering with to entry this doc from inside Australia, you characterize to MOODY’S that you’re, or are accessing the doc as a consultant of, a “wholesale shopper” and that neither you nor the entity you characterize will immediately or not directly disseminate this doc or its contents to “retail shoppers” inside the that means of part 761G of the Firms Act 2001. MOODY’S credit standing is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the fairness securities of the issuer or any type of safety that’s out there to retail buyers.Further phrases for Japan solely: Moody’s Japan Ok.Ok. (“MJKK”) is a wholly-owned credit standing company subsidiary of Moody’s Group Japan G.Ok., which is wholly-owned by Moody’s Abroad Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan Ok.Ok. (“MSFJ”) is a wholly-owned credit standing company subsidiary of MJKK. MSFJ just isn’t a Nationally Acknowledged Statistical Ranking Group (“NRSRO”). Subsequently, credit score rankings assigned by MSFJ are Non-NRSRO Credit score Rankings. Non-NRSRO Credit score Rankings are assigned by an entity that isn’t a NRSRO and, consequently, the rated obligation is not going to qualify for sure forms of therapy below U.S. legal guidelines. MJKK and MSFJ are credit standing businesses registered with the Japan Monetary Companies Company and their registration numbers are FSA Commissioner (Rankings) No. 2 and three respectively.MJKK or MSFJ (as relevant) hereby disclose that the majority issuers of debt securities (together with company and municipal bonds, debentures, notes and business paper) and most popular inventory rated by MJKK or MSFJ (as relevant) have, previous to project of any credit standing, agreed to pay to MJKK or MSFJ (as relevant) for credit score rankings opinions and providers rendered by it charges starting from JPY125,000 to roughly JPY550,000,000.MJKK and MSFJ additionally keep insurance policies and procedures to deal with Japanese regulatory necessities. ​