Fitch Ratings has affirmed Georgian auto spare parts and maintenance provider Tegeta Motors LLC’s expected Long-Term Issuer Default Rating (IDR) of ‘B-(EXP)’. The Outlook is Stable.
The affirmation reflects an adequate increase in committed liquidity to offset upcoming 2018 maturities despite the postponed issuance of a planned local-currency bond. Unsuccessful issuance of a medium- or long-term local currency bond of about GEL30 million by end-August 2018 could result in a negative rating action as this would mean a failure to diversify funding sources and improve liquidity.
Tegeta Motors’ rating of ‘B-(EXP)’ is underpinned by its leading position in the local market and significant proportion of aftermarket-driven non-cyclical revenues. However, the rating is limited by the group’s small scale, lack of geographical diversification, material FX risk, weak operating environment, negative free cash flow (FCF) and tight liquidity position.