Fitch Ratings raises outlook for Uzbekistan Airports, confirming 'BB' credit rating

The international rating agency Fitch Ratings has upgraded the issuer's (IDR) long-term rating of JSC UzAuto Motors (UAM) from 'BB-' to 'BB'. The rating outlook remains 'Stable'. Concurrently, the agency improved the rating of the company's senior unsecured eurobonds to 'BB' and assigned a recovery rating of 'RR4'.

Reasons for the Rating Upgrade

Fitch explained that this rating change reflects an improvement in the company's Credit Profile (SCP), which was raised from 'b-' to 'b'. This positive shift is driven by the successful refinancing of eurobonds, increased liquidity buffers, and the expectation of generating positive free cash flow (FCF) between 2026 and 2029.

Debt Structuring and Finance

A key factor contributing to the rating increase was the successful restructuring of UAM's debt obligations. In November 2025, the company placed senior unsecured eurobonds on the market totaling $350 million, maturing in November 2030. Proceeds from this placement were used to fully repay a $300 million eurobond issuance maturing in May 2026, as well as partially repay debts to local commercial banks.

According to the rating agency, the company's financial position has significantly strengthened. By the end of 2025, UzAuto Motors' cash reserves grew to $89.5 million compared to $42.8 million recorded a year earlier. Furthermore, the automaker retains access to approximately $70 million in unused capacity under export credit lines and a syndicated term loan. Fitch anticipates further improvements in the company's liquidity as it transitions to positive free cash flow.

Market Dynamics and Sales

Following two years of sluggish domestic demand and tighter credit conditions, the local market has begun to recover. By the end of 2025, UzAuto Motors sold nearly 400,000 vehicles, and the average domestic price reached $10,600. The company's total revenue amounted to $4.1 billion, and Fitch-defined EBITDA reached $355 million, exceeding the agency's initial forecast of $307 million.

Despite the improved financial performance, free cash flow remained negative in 2025, at minus $52 million. Fitch attributes this deficit to the increase in working capital tied up in unpaid accounts receivable from auto loans issued directly to customers. The agency forecasts that free cash flow will become positive starting in 2026, as these retail loans are gradually repaid and the company ceases its direct consumer financing schemes.

Government Involvement and Risks

Fitch also highlighted the high level of government involvement in the company's operations. The Government of Uzbekistan indirectly controls 99.7% of UzAuto Motors' equity, actively participates in approving capital expenditure (capex) and financing decisions, and influences pricing policy, particularly in the budget passenger car segment. Examples of state support include tax incentives, shareholder loans, and protective customs tariffs on imported vehicles.

The rating agency noted that UzAuto Motors is a strategically important enterprise for the economy of Uzbekistan. As the sole domestic vehicle producer in volume, it supports over 30,000 jobs directly and indirectly, plays a significant role in the consumer lending ecosystem, and pioneered corporate eurobond issuers in Uzbekistan. Fitch warns that any potential default by UAM would have serious negative consequences for sovereign debt and other state enterprises seeking access to international capital markets.

Prospects and Limitations

Nevertheless, the automaker's credit profile is constrained by a high concentration in the domestic market (where the company holds an 80% share), a narrow range of models, the absence of an independent automotive brand, and operational dependence on long-term licensing agreements with General Motors. According to Fitch's analysis, UzAuto Motors sales for 2026 are projected at 400,000 units, with the average vehicle price slightly increasing to $10,800. Annual revenue is expected to grow to $4.4 billion in 2026 and expand to $4.7 billion by 2029. The agency also expects UAM's EBITDA margin to stabilize around 9.5% by 2029, with annual capital expenditures amounting to approximately 1.4% of revenue, and no major mergers or acquisitions are planned.

Moody's Ratings has made positive changes to the ratings of eleven Uzbek insurance companies. This decision was made after the credit rating of the Government of Uzbekistan issuer was raised from Ba3 to Ba2 on June 25, 2026, and the outlook was changed from positive to stable.

Company Rating Upgrades

The agency upgraded the Financial Strength Ratings (IFSR) for a number of organizations. For example, Uzbekinvest received an upgrade in local currency IFSR to Ba1 (from Ba2) and foreign currency to Ba2 (from Ba3), and its Basic Credit Rating (BCA) was also upgraded to ba1 (from ba2) with a change in outlook to stable. Uzagrosugurta received an IFSR upgrade to Ba2 (from Ba3) and a BCA upgrade to b1 (from b2), with the outlook also becoming stable.

Other companies also received improvements: Mosaic Insurance Group (MIG) upgraded its IFSR to Ba3 (from B1) with a positive outlook; Quantum Insurance received an IFSR upgrade to Ba3 (from B1) while maintaining a stable outlook; Euroasia Insurance improved its IFSR to B1 (from B2) while maintaining a positive outlook. Kafil and Alskom received an IFSR upgrade to B1 (from B2) while maintaining stable outlooks.

Additionally, Impex Insurance and Neo Insurance upgraded their IFSR to B2 (from B3) with positive outlooks. My Insurance maintained its B2 rating with a stable outlook, and Alfa Invest maintained its B2 rating, changing its outlook from negative to stable.

Reasons for Rating Changes

The rating agency's actions are based on three main factors. Firstly, it is the reassessment of the operating environment in the Uzbek insurance market, which has improved due to the refinement of institutional structures and economic prospects. Secondly, there has been an increase in the credit quality of the government and local commercial banks, which has positively affected the quality of insurers' assets. Thirdly, specific corporate indicators of individual companies were taken into account.

Improvements in the operating environment are supported by economic diversification, sustainable GDP growth, slowing inflation, and ongoing financial sector reforms. Higher interest rates continue to increase investment returns for insurers whose portfolios consist mainly of bank deposits. Nevertheless, the relatively low level of insurance penetration in Uzbekistan compared to global standards remains a limiting factor when assessing the entire market.

Key Company Performance Indicators

Regarding Uzbekinvest, its credit profile exceeds the sovereign rating ceiling due to a significant portfolio of high-quality foreign assets—mainly investment-grade debt securities denominated in US dollars and held through a British subsidiary. Furthermore, the company has a large share of international reinsurance business, which accounted for about 50% of total premiums in 2025. In 2025, the company's net profit reached 55 billion soums, compared to 45 billion soums the previous year.

For Uzagrosugurta, the rating upgrade includes a two-step increase above its standalone credit assessment, reflecting its 99.6% state ownership and systemic importance to the national agricultural sector. The company's net profit for 2025 grew to 14.1 billion soums compared to 4.6 billion soums in 2024.

The positive outlook for Mosaic Insurance Group (MIG) is based on expectations that international reinsurance segments will continue to grow over the next 12–18 months. Net profit grew to 37 billion soums in 2025 from 9 billion soums in 2024, and the solvency ratio reached 244% as of the first quarter of 2026.

Quantum Insurance's rating upgrade is secured by a conservative underwriting policy and a record net profit of 24 billion soums in 2025, while the combined ratio remained consistently below 100%. Euroasia Insurance demonstrated a return on equity of 20% in 2025 thanks to the inflow of international reinsurance business, recovering from a negative 1% in 2024.

Kafil, holding a 3% market share in Uzbekistan, recorded a net profit of 18.7 billion soums in 2025, supported by improved asset quality and strong capital adequacy in retail and commercial divisions. Alskom maintains strong distribution channels through corporate ties with state entities Uzbektelecom and Aloqabank. Net profit grew to 16.2 billion soums, largely driven by investment income, despite modest underwriting profitability.

Thanks to capital injections, Impex Insurance's investment portfolio doubled during 2025, providing a return on equity of 15%. Neo Insurance completed its main investment phase, achieving a profit of 9 billion soums in 2025 after a loss of 1 billion soums in 2024. Gross premiums increased to 130 billion soums from 75 billion soums, confirming the success of the digital retail insurer.

My Insurance's rating was confirmed at B2 because macroeconomic benefits were offset by rapid premium growth (90% in 2025), high exposure to credit insurance (over 80% of the portfolio), and low underwriting profitability. Alfa Invest maintained seventh place in gross premiums with consolidated net profit of 56 billion soums in 2025. The company's ratings are limited by a high group leverage ratio of 47%, resulting from commercial bank loans used to acquire hotel business lines.