Moody's confirms Azerbaijan's financial stability

Moody's Investors Service ("Moody's") reviews all of its ratings periodically under regulations -- either annually or, in the case of governments and specific EU-based supranational organizations, semi-annually. This periodic review is unrelated to the requirement to specific calendar dates on which EU and particular other sovereign and sub-sovereign rating actions may occur.

Moody's conducts these periodic reviews through portfolio reviews. Moody's reassesses each outstanding rating's appropriateness in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. Since January 1, 2019, Moody's has been issuing press releases following each periodic review announcing its completion.

Moody's has now completed the periodic review of a group of issuers that includes Azerbaijan and may include related ratings. The review did not involve a rating committee, and this publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future; credit ratings and/or outlook status cannot be changed in a portfolio review and hence are not impacted by this announcement.

The credit profile of Azerbaijan (issuer rating Ba2) reflects the country's "ba3" economic strength, which balances moderate wealth levels against the economy's significant exposure to hydrocarbons; its "b2" institutions and governance strength that takes into account weaknesses in control of corruption and the rule of law, as well as limited voice and accountability, balanced against gradually increasing monetary and fiscal policy credibility and effectiveness from a low base; the government's "a2" fiscal strength underpinned by the country's strong net creditor position, as the size of sovereign wealth assets covers all of the government's direct debt and guarantees, notwithstanding the high share of foreign currency debt; and its "ba" susceptibility to event risks driven by persistent geopolitical tensions with Armenia over the disputed territory of Nagorno-Karabakh.

The document summarizes Moody's view as of the publication date. It will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.