* Azeri state oil fund, ambassador deny media talk
* Speculation followed Hungary's release of Azeri soldier
* Hungary seeking sovereign investors as IMF talks drag
BUDAPEST, Sept 4 Azerbaijan dismissed media
reports it plans to buy Hungarian bonds, leaving Budapest to
continue an extended search for new sovereign investors to help
it cut uncomfortably high borrowing costs.
Local blogs and newspapers had speculated that Budapest's
release of a jailed Azeri soldier last week - which led
Armenia to suspend diplomatic relations with Hungary - might be
linked to a debt sale or some other bilateral economic deal.
But Azerbaijan's ambassador to Budapest told a newspaper the
reports were "nonsensical", while the country's oil fund denied
it had any such investment plans. Budapest had also denied the
"The state oil fund ... is not considering any investment
into debt obligations or other financial tools in Hungary," it
said in a statement on its website.
Hungarian business weekly Figyelo had reported last month
that Azerbaijan might invest 2-3 billion euros of its oil export
revenues in a special Hungarian bond issue.
Hungary has been unable to tap international debt markets
this year due to the high returns demanded by private investors
concerned about the government's management of the economy.
It is negotiating an aid package from the International
Monetary Fund (IMF) and the European Union. But the talks are
dragging on, and Hungary's debt agency said last month it was
looking at alternative markets for potential debt issuance.
Last week Hungary allowed soldier Ramil Safarov to return
home, where he was pardoned by Azerbaijan's president Ilham
Aliyev. He had been sentenced to life in prison for the 2004
killing of an Armenian officer during NATO training in Hungary.
Hungary said it acted in compliance with international law
and that Azerbaijan had promised to uphold Safarov's sentence.
While the two countries were in talks about developing closer
economic ties, these were in no way linked to the release of the
soldier, it said. ID:nL6E8K3L2Q]
Reuters reported last month from Istanbul that Hungary was
in talks with Azerbaijan and also Turkey to issue sovereign
bonds in local currencies.
Armenia and Azerbaijan have been at odds since going to war
in 1991 over the mainly Armenian Nagorno-Karabakh enclave. A
ceasefire was signed in 1994 but new cross-border clashes this
year have prompted worries that major hostilities could erupt.
(Reporting by Krisztina Than; Editing by John Stonestreet)