Moody's upgrades SOCAR's rating to investment grade

Moody's Ratings has upgraded to investment grade the rating of State Oil Company of the Azerbaijan Republic (SOCAR) by assigning Baa3 long-term issuer rating, Report informs referring to Moody's.

The outlook was changed to stable from positive.

The ba2 Baseline Credit Assessment (BCA) was affirmed.

"Today's rating action follows the upgrade of the ratings of the Government of Azerbaijan to Baa3 from Ba1 on July 4, 2025, with the positive outlook being maintained. Today's rating action is in line with the sovereign rating action and reflects SOCAR's strong credit linkages with the state as well as its significant exposure to Azerbaijan's operating and macroeconomic environment. The rating action reflects the company's healthy financial performance and credit metrics amid a tepid oil and gas market environment. It also incorporates SOCAR's strategic importance for the government of Azerbaijan and a track record of more discipline in strategic and shareholder decisions, investment spending and shareholder distributions. The rating also factors in lacklustre upstream operating performance, and limited transparency and complex group structure. The stable outlook reflects our view that a sovereign upgrade to Baa2 alone would not suffice for a positive rating action on SOCAR without some strengthening in its standalone credit quality and material improvements in its transparency, disclosures and predictability in decision making," reads the update.

"The sovereign upgrade reflects improvements in institutional effectiveness, proven through a lengthening track record of maintaining macroeconomic stability through recent shocks and oil price swings. Ongoing progress in regulatory reforms has enhanced banking sector stability, while continued commitment to reducing fiscal reliance on hydrocarbon revenues strengthens fiscal resilience. Azerbaijan has also made further progress on economic diversification, with prospects supported by rapid growth in the transport sector.

As a result, operating and macroeconomic environment for SOCAR has improved and the government's financial capacity to support the company, if needed, has strengthened, which is credit positive for the company."