Fitch affirms MCGF’s rating

Baku. 27 February. REPORT.AZ/ Fitch Ratings has affirmed Mortgage and Credit Guarantee Fund of the Republic of Azerbaijan's (MCGF) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BB+' with Stable Outlook, Report informs referring to the agency.

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The affirmation reflects Fitch's unchanged view on MCGF's strong link with the Republic of Azerbaijan (BB+/Stable), which warrants an equalisation of MCGF's ratings with those of the sovereign under Fitch's 'Government-Related Entities Rating Criteria'.

This is supported by 100%-state ownership, tight control over the fund's activity and the strategic importance of MCGF to the state's economic policy.

Fitch assumes the fund will continue to benefit from ongoing state support over the medium term, i.e. in the form of capital injections and central bank's buy-back guarantee over its bonds. MCGF also enjoys indirect support, which includes exemption of income tax repayment, low-cost funding, and use of profits gained from the operations at its disposal.

Fitch views the fund's role as strategically important to the state housing policy, as provision of affordable housing is a high priority for Azerbaijan: ‘The fund is the only state entity that provides subsidised mortgages in the republic. It also operates as the centralised mortgage lender in the local mortgage market amid recent economic turbulence and increased market rates. According to management's estimates, the fund holds more than 60% of real estate loans portfolio borrowed by households in Azerbaijan’.