{"id":12625,"date":"2025-11-14T14:31:03","date_gmt":"2025-11-14T09:31:03","guid":{"rendered":"https:\/\/frank.uz\/bez-kategorii\/moodys-maintained-uzauto-motors-ba3-rating-thanks-to-government-support\/"},"modified":"2025-11-14T14:31:03","modified_gmt":"2025-11-14T09:31:03","slug":"moodys-maintained-uzauto-motors-ba3-rating-thanks-to-government-support","status":"publish","type":"post","link":"https:\/\/frank.uz\/en\/news-en\/moodys-maintained-uzauto-motors-ba3-rating-thanks-to-government-support\/","title":{"rendered":"Moody\u2019s maintained UzAuto Motors\u2019 Ba3 rating thanks to government support"},"content":{"rendered":"<h3>Why is this important<\/h3>\n<p>The Ba3 rating is maintained not by finances, but by state support \u2014 protection from competition. Sales have been falling for two years, the cash flow has been negative \u2014 the company survives by installment payments and debt accumulation. The GM license expires in 2027, there is a risk of technology loss.  <\/p>\n<h3>What happened<\/h3>\n<ul>\n<li>Sales -3%, revenue -8% to $4 billion, debt\/EBITDA 1.6x (from 1.3x);<\/li>\n<li>Negative cash flow for two years;<\/li>\n<li>The Ba3 rating was maintained thanks to state support, dominance of 82%;<\/li>\n<li>May 2026: repayment of $300 million, refinancing with new bonds;<\/li>\n<li>Liquidity of $44 million with a turnover of $4 billion.<\/li>\n<\/ul>\n<h3>Financial indicators<\/h3>\n<p><strong>12 months until June 2025:<\/strong><\/p>\n<ul>\n<li>Production: 378,000 cars;<\/li>\n<li>Revenue: $4 billion (-8%);<\/li>\n<li>EBITDA: $471 million;<\/li>\n<li>Sales: -3%;<\/li>\n<li>Debt\/EBITDA: 1.6x (with 1.3x).<\/li>\n<\/ul>\n<p><strong>Cash flow: <\/strong>negative for two consecutive years due to the outflow of working capital (transition to installment payments).<\/p>\n<h3>Reasons for fall<\/h3>\n<ul>\n<li><strong>Transition to installment payments:<\/strong> the company sells cars for installment payments, freezing working capital \u2014 an increase in the debt burden, a negative cash flow.<\/li>\n<li><strong>Demand decline: <\/strong>outdated models (Cobalt, Damas, Labo), high prices, competition with Chinese cars.<\/li>\n<\/ul>\n<h3>Refinancing<\/h3>\n<ul>\n<li><strong>May 2026: <\/strong>repayment of \u20ac300 million in Eurobonds.<\/li>\n<li><strong>Plan: <\/strong>issuance of new bonds for 5 years under the Ba3 rating.<\/li>\n<li><strong>Risk: <\/strong>Moody&#8217;s assumes that the placement may not happen \u2014 then alternative financing.<\/li>\n<\/ul>\n<h3>Debt Structure (September 2025)<\/h3>\n<ul>\n<li><strong>Bonds:<\/strong> $300 million (senior unsecured).<\/li>\n<li><strong>Banks:<\/strong> $77.2 million (international).<\/li>\n<li><strong>Ipoteka Bank:<\/strong> $50 million (for vehicle reserves).<\/li>\n<li><strong>Kapitalbank: <\/strong>$80 million (loan line, fully utilized).<\/li>\n<\/ul>\n<h3>Liquidity<\/h3>\n<ul>\n<li><strong>$44 million:<\/strong> cash funds as of June 30, 2025 \u2014 small with a turnover of $4 billion.<\/li>\n<li><strong>Forecast:<\/strong> $530 million from operations for 18 months will go to working capital, capital expenditures of $105 million, and dividends.<\/li>\n<li><strong>Credit line: <\/strong>$80 million in Kapitalbank has been fully utilized, will be repaid after bond placement.<\/li>\n<\/ul>\n<h3>Domestic support is the basis of the rating<\/h3>\n<ul>\n<li><strong>Base score b1:<\/strong> three steps below Ba3 \u2014 weak creditworthiness.<\/li>\n<li><strong>Ba3: <\/strong>thanks to government support.<\/li>\n<\/ul>\n<p><strong>Support factors:<\/strong><\/p>\n<ul>\n<li>Dominance of 82% of the market;<\/li>\n<li>Strategic role (available auto);<\/li>\n<li>Government control (control package);<\/li>\n<li>Protection from competition (utilization fees, import barriers, benefits).<\/li>\n<\/ul>\n<h3>Monopoly<\/h3>\n<ul>\n<li><strong>82% \u0440\u044b\u043d\u043a\u0430:<\/strong> \u0431\u043b\u0430\u0433\u043e\u0434\u0430\u0440\u044f \u0437\u0430\u0449\u0438\u0442\u0435 \u043e\u0442 \u043a\u043e\u043d\u043a\u0443\u0440\u0435\u043d\u0446\u0438\u0438.<\/li>\n<li><strong>Utilization fees:<\/strong> increase for electric vehicles from May 1, 2025 \u2014 protection of UzAuto from BYD, Chinese brands.<\/li>\n<li><strong>Import barriers:<\/strong> restricting access to modern, affordable cars.<\/li>\n<li><strong>Consequences:<\/strong> Consumers are limited by outdated models at inflated prices.<\/li>\n<\/ul>\n<h3>GM License<\/h3>\n<ul>\n<li><strong>Until 2027:<\/strong> agreement with General Motors on the production of Chevrolet (Cobalt, Damas, Labo).<\/li>\n<li><strong>Risk:<\/strong> After 2027 loss of license \u2014 no own technology, R&amp;D.<\/li>\n<li><strong>Moody&#8217;s: <\/strong>lowering the rating if the license doesn&#8217;t extend or conditions worsen.<\/li>\n<\/ul>\n<h3>Competition<\/h3>\n<ul>\n<li><strong>Private manufacturers:<\/strong> competition is growing, but is being controlled by the government to protect UzAuto.<\/li>\n<li><strong>BYD:<\/strong> Uzbekistan&#8217;s electric vehicle production is UzAuto&#8217;s competition, but recycling fees are limited.<\/li>\n<\/ul>\n<h3>Export<\/h3>\n<ul>\n<li><strong>11%<\/strong> to Kazakhstan, Georgia, Armenia, Kyrgyzstan.<\/li>\n<li><strong>Main support:<\/strong> 325 billion was allocated in 2022 to pay the recycling fee for exports to Georgia, Belarus \u2014 expenses for taxpayers.<\/li>\n<\/ul>\n<h3>Moody&#8217;s forecast<\/h3>\n<ul>\n<li><strong>Stable: <\/strong>sales stabilization is expected, positive cash flow in 12-18 months, refinancing of $300 million.<\/li>\n<li><strong>Improvement:<\/strong> if Uzbekistan&#8217;s rating rises, export growth, debt\/EBITDA &lt; 3.5x.<\/li>\n<li><strong>Decline:<\/strong> if Uzbekistan&#8217;s rating decreases, sales will fall, debt\/EBITDA ~4.5x, liquidity will weaken.<\/li>\n<\/ul>\n<h3>Context<\/h3>\n<ul>\n<li><strong>The Ba3 rating is not for quality:<\/strong> it&#8217;s for state support and protection from competition.<\/li>\n<li><strong>Sales decline, revenue:<\/strong> outdated models, high prices, transition to installment payments.<\/li>\n<li><strong>Monopoly 82%:<\/strong> due to recycling fees, import barriers \u2014 consumers suffer.<\/li>\n<li><strong>GM license until 2027:<\/strong> the risk of losing technology, dependence on the American auto giant.<\/li>\n<li><strong>Negative cash flow:<\/strong> two years \u2014 the company survives by accumulating debt.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>In the 12 months leading up to June 2025, sales declined, revenue fell, the debt\/EBITDA ratio increased, and the company recorded negative cash flow for two consecutive years. Liquidity stands at $44 million against a turnover of $4 billion. <\/p>\n","protected":false},"author":4,"featured_media":11970,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_sharing_image":{"poster":"https:\/\/frank.uz\/wp-content\/uploads\/2025\/11\/6916f9648117c.jpg","width":1200,"height":630,"template":"2bf59057","mode":"auto"},"_sharing_image_fieldset":{"Dv78f24rp1hU":11970,"YlB8HH34jIzY":"Moody\u2019s maintained UzAuto Motors\u2019 Ba3 rating thanks to government support"},"pin_until":"","footnotes":""},"categories":[2061],"tags":[3022,2062,3113,2325],"class_list":["post-12625","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-en","tag-auto-industry","tag-business","tag-moodys-en","tag-uzauto-motors-en"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.0 (Yoast SEO v25.9) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Moody\u2019s maintained UzAuto Motors\u2019 Ba3 rating thanks to government support &#8212; Frank.uz<\/title>\n<meta name=\"description\" content=\"In the 12 months leading up to June 2025, sales declined, revenue fell, the debt\/EBITDA ratio increased, and the company recorded negative cash flow for two consecutive years. 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