Moody's Ratings (Moody's) today has affirmed the Ba3 corporate family rating (CFR) and b1 Baseline Credit Assessment (BCA) of JSC UzAuto Motors (UzAuto). At the same time, Moody's assigned a Ba3-PD probability of default rating (PDR) to UzAuto and a Ba3 instrument rating to proposed senior unsecured notes to be issued by UzAuto, with stable outlook.
The affirmation of UzAuto's CFR reflects the expectation that the planned placement of the senior unsecured bond will improve UzAuto's liquidity profile, assuming the successful issuance of a new benchmark sized bond with a five year maturity. The company intends to use proceeds to repay international and local bank debt and refinance its $300 million Eurobond due in May 2026. The rating affirmation factors in the expectation that in case UzAuto does not proceed with the proposed notes placement, it will promptly raise alternative funds to refinance the May 2026 Eurobond maturity.
The affirmation also reflects UzAuto's solid credit metrics, despite a temporary decline in sales and EBITDA over the 12 months ended June 2025, and an increase in leverage. These changes stem from the company's strategic shift to an installment-based sales model and are in line with the expectations. UzAuto remains the largest original equipment manufacturer (OEM) in Uzbekistan, holding around 82% share of the domestic passenger car market. During the same period, the company produced 378,000 vehicles, generating revenue of $4.0 billion and Moody's-adjusted EBITDA of $471 million. To support the sales model transition, UzAuto increased its debt to meet working capital needs, resulting in a rise in Moody's-adjusted leverage to 1.6x as of 30 June 2025 from 1.3x as of 31 December 2024. While current metrics reflect the impact of this strategic shift, it is expected that gradual improvement over the next two years as the company fully transitions to the new sales model, while also seeking to introduce third-party financing options for its customers.
UzAuto's rating of Ba3 reflects the company's BCA of b1; the Ba3 rating of the Government of Uzbekistan, which owns a 99.7% stake in the company; and the assumptions of a high default dependence between the company and the government, and the strong probability of government support to the company in the event of financial distress. The strong probability of extraordinary support is underpinned by UzAuto's dominant market position and strategic role in providing affordable vehicles. The company is also instrumental to the government's industrial strategy that aims at expanding the country's auto manufacturing sector as a growing sector of skilled employment and exports. This is further supported by the government's commitment to a continued majority shareholding and past support provided in the form of financial assistance to facilitate expansion, as well as supportive regulation that tightly controls competition and thereby protects the company's market leading position.
UzAuto's b1 BCA is supported by Uzbekistan's fast growing economy and underpenetrated auto market, that supports further sustained market growth; (2) the automobile manufacturing sector's strategic importance to the government's industrial strategy that supports continued localization of auto parts manufacturing and an expansion of overall production for local and export markets; and (3) balanced financial policies and solid credit metrics.
The BCA also takes into account the company's small scale compared to other global rated auto manufacturers; its geographic concentration on one main country, Uzbekistan, which accounts for around 90% of sales, and exposure to the economic, regulatory and political environment in the country; increasing competition from private auto manufacturers, as well as government initiatives to increase local production of electric vehicles (EVs) by competitor BYD Company Limited (BYD), albeit in a controlled way that is intended to preserve UzAuto's leading market position; dependence on license agreement with General Motors Company and dependence on continued supply of essential parts through the GM network; (5) limited and relatively outdated models; and (6) negative free cash flow (FCF) generation over the past two years and the expectation that it will remain negative in 2025 because of significant working capital outflow.
Liquidity
Under the assumption of the planned issuance, UzAuto's liquidity will remain adequate over the next 18 months. The company intends to use the proceeds to refinance part of its short-term debt maturities, including the $300 million Eurobond due in May 2026.
It is expected that UzAuto to generate around $530 million of funds from operations. Together with cash balance of $44 million as of 30 June 2025, this will be sufficient to cover significant working capital outflow, capital expenditure of $105 million and anticipated dividend distributions over the 18 months period.
The company also maintains a $80 million revolving credit facility (RCF) with Kapitalbank, JSCB (Kapitalbank, Ba3 positive), which is currently fully drawn and it is expected that it to be repaid following the planned bond issuance, after which the facility will become available as a source of liquidity. The RCF matures in May 2028. The company's liquidity can be supported by current and non-current deposits, although a portion of that remains restricted.
Structural Considerations
Currently, the company's debt comprises of senior unsecured notes of $300 million ranked pari passu with senior unsecured debt from international banks of $77.2 million as of September 2025. UzAuto also has a $50 million loan with Ipoteka Bank and the $80 million RCF with Kapitalbank, both secured by the car stock. Proforma for the proposed senior unsecured notes issuance, the company's debt capital structure will consist of senior unsecured notes and the senior secured RCF. It is expected that that the senior unsecured debt will represent a dominant portion in the company's debt capital structure, therefore the Ba3 rating of the proposed notes is at the level of UzAuto's CFR.
Stable Outlook
The stable outlook reflects the expectation that UzAuto's sales volumes and revenue will stabilise from 2025 onwards, following a volume decline of 3% and revenue decline of 8% in 2024. It also reflects the expectation that FCF will turn positive in the next 12-18 months, credit metrics will remain solid, the company will refinance its large debt maturities in a timely manner and its liquidity will remain adequate.
Factors That Could Lead To An Upgrade Or Downgrade Of The Ratings
UzAuto's rating could be upgraded if the government bond rating of Uzbekistan and the BCA are upgraded, provided the assumption for extraordinary government support is not lowered. The company's BCA could be upgraded if the company establishes a track record of sustained growth despite increased competition in Uzbekistan, or if it significantly increases exports and improves its geographical diversification of sales. For an upgrade of the BCA, it would also be expected that debt/EBITDA to remain below 3.5x, retained cash flow (RCF)/debt to remain above 30%, free cash flow to be sustainably positive and liquidity to improve (all metrics are Moody's-adjusted).
The rating could be downgraded if the government bond rating of Uzbekistan is downgraded, or if the BCA is downgraded or the probability of extraordinary support is reassessed to a lower level. The BCA could be downgraded if the company's sales decline significantly. A downgrade would also be considered if the licence agreement with GM is not extended beyond 2027 or its terms and conditions significantly weaken for UzAuto. Debt/EBITDA trending towards 4.5x or RCF/debt trending towards 20%, both on a sustained and Moody's-adjusted basis, as well as weakening liquidity, could also lead to a downgrade of the BCA.
Company Profile
JSC UzAuto Motors is 99.7% owned by the Government of Uzbekistan. It produces certain models of Chevrolet branded cars, mainly Cobalt, Damas and Labo, under a licence agreement with GM that runs until 2027. The company generated revenue of $4.0 billion and Moody's-adjusted EBITDA of $471 million during the last 12 months ended 30 June 2025. During the same period, the company produced around 378,000 cars, of which 89% were sold locally in Uzbekistan and the rest exported to Central Asian countries, including Kazakhstan (Baa1 stable), Georgia (Ba2 negative), Armenia (Ba3 stable) and the Kyrgyz Republic (B3 positive).
