S&P revises outlook on ratings of Azerbaijan Entrepreneurship Development Fund

The international rating agency S&P Global Ratings revised its outlook on the ratings of the Azerbaijan Entrepreneurship Development Fund (SIF) from stable to positive, confirming the long-term and short-term issuer credit ratings (ICR) at the level of BB-/B.

Report informs citing S&P that the ratings on EDF are based on the agency's view of its important role of channeling government financing at subsidized rates to entrepreneurs through commercial banks; absence of any debt; and robust capitalization. They also reflect its business concentration on the Azerbaijani banking sector, as well as the high share of legacy problem loans.

"The positive outlook reflects our expectations that EDF's creditworthiness could improve if it significantly reduces its legacy loan portfolio, and we see no signs of material asset quality deterioration in the outstanding portfolio over the next 12 months. We could upgrade the fund over the next 12 months once it cleans up its loan portfolio from legacy problem loans and the asset quality of loans disbursed over the past few years remains comparable to that of peers with an adequate risk position," the agency said.

S&P could revise the outlook to stable or lower the ratings over the next 12 months "if EDF's creditworthiness weakens following the merger with Azerbaijan Investment Co."