BAKU, Azerbaijan, August 22. The potential for Azerbaijan to transition to the investment category in the medium-term perspective is being created thanks to the diversification of its economy, Trend reports via Deputy Head of Research at Russia's Gazprombank Gulnara Khaidarshina.
According to her, the positive rating action of Moody's agency and the return of Azerbaijan's sovereign rating to a level comparable to the BB+ credit rating group of S&P and Fitch agencies are favorable for the Eurobonds of this sovereign issuer.
Moody's international agency upgraded Azerbaijan's sovereign rating to 'Ba1' from 'Ba2' on August 5, 2022.
"The decision to raise Azerbaijan's rating was facilitated by the improvement of the effectiveness of the economic policy, which made it possible to strengthen resistance to future risks. Also, despite the pandemic, fiscal indicators remained strong and improved faster than expected," Khaidarshina said.
She stressed that Gazprombank positively views Azerbaijan's position as a sovereign issuer, given the low debt burden, the highest availability of international reserves in the CIS Commonwealth of Independent States, strong economic growth, strengthening its role as a Eurasian logistics center in the context of restructuring global supply chains, economic diversification due to new projects in Karabakh, maintaining macroeconomic stability and the availability of sufficient resources to maintain a stable exchange rate of the manat in the medium-term perspective
"We suppose that the positive rating action of Moody's and the return of Azerbaijan's sovereign rating to a level comparable to the BB+ rating group of S&P and Fitch agencies are favorable for the Eurobonds of this sovereign issuer. Now, thanks to economic diversification, the potential is being created for the transition to the investment category in the medium-term perspective and a reduction in the yield of Azerbaijani Eurobonds by at least 100 basis points," she added.