LONDON, March 11 (Fitch) Fitch Ratings has assigned Azerbaijan's
eurobonds a 'BBB-' rating, in line with the sovereign's foreign
Long-term Issuer Default Rating (IDR).
KEY RATING DRIVERS
In line with Fitch's latest assessment of Azerbaijan's sovereign
17 October 2013, Azerbaijan's 'BBB-' IDR reflects the following
Oil output is stabilising after a 15% decline since the 2010
peak, improving the
short-term outlook for growth and public finances.
Strong sovereign balance sheet, with sovereign assets held in
the State Oil Fund
of Azerbaijan (SOFAZ) reached 49% of GDP at end-2013.
The 2014 budget calls for a reduction in reliance on oil revenue
in the form of
transfers from SOFAZ.
Azerbaijan is estimated to have recorded a current account
surplus of 17% of GDP
in 2013, and Fitch forecasts it will continue to record
The banking system is a weakness relative to 'BBB' rated peers.
Governance indicators and the business environment remain below
The Stable Outlook on Azerbaijan's IDRs reflects Fitch's view
that upside and
downside risks to the rating are balanced. The main factors that
collectively might lead to rating action are as follows:
-Sustained action to reduce risks to the public finances from
oil price shocks
via a credible medium-term fiscal strategy would increase
confidence in the
sustainability of the public finances.
-Improving the business climate to promote diversification of
the economy in
preparation for the forecast decline in oil output.
-More rapid spending growth than forecast would erode the
strength in the medium term.
-A severe and prolonged oil price shock.
-A domestic or regional political shock.
Fitch assumes that the price of oil, Azerbaijan's main export
and source of
budget revenue, will average USD105/barrel in 2014, and
USD100/barrel in 2015.
Growth and fiscal projections are sensitive to oil production
assumes that oil production stabilises in 2014 and 2015.
Fitch assumes that Azerbaijan avoids domestic or regional
political shocks, such
as no escalation in hostilities with Armenia over Nagorno
Karabakh, and domestic
political stability is preserved.
Fitch assumes that the government broadly adheres to the 2014
+44 20 3530 1048
Fitch Ratings Limited
30 North Colonnade
London E14 5GN
+44 20 3530 1623
+44 20 3530 1046
Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495
956 9908, Email:
firstname.lastname@example.org; Peter Fitzpatrick,
London, Tel: +44 20
3530 1103, Email: email@example.com.
Additional information is available on www.fitchratings.com
Applicable criteria, 'Sovereign Rating Criteria' dated 13 August
'Country Ceilings' dated 09 August 2013, are available at
Applicable Criteria andALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.
DETAILS OF THIS
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH