Sovereign wealth assets held by the State Oil Fund of Azerbaijan are substantial, covering around five times the government's direct debt, Moody’s said in a statement affirming the Government of Azerbaijan's issuer and foreign currency senior unsecured ratings at Ba1, Report informs.
According to the company, the affirmation of Azerbaijan's Ba1 rating is underpinned by a strong government balance sheet with a low debt burden and a net asset position, and very high debt affordability.
“The availability of such fiscal coffers limits government liquidity risks, which in itself is modest given low gross borrowing requirements compared to peers. Effective use of such fiscal buffers during the pandemic allowed for countercyclical spending and limited the deterioration in the government's fiscal and debt metrics. Besides, these assets are denominated in foreign currency and invested primarily in liquid, fixed income securities, providing additional external buffers in supplement to foreign exchange reserves held by the central bank,” Moody’s said.