Fitch assigns Azerbaijan's eurobonds 'BBB-' rating
By Nigar Orujova
Fitch Ratings has assigned Azerbaijan's $1.25 billion worth 2,024 eurobonds a 'BBB-' rating, in line with the sovereign's foreign currency Long-term Issuer Default Rating (IDR).
The country's oil output was stabilizing after a 15 percent decline since the 2010 peak, improving the short-term outlook for growth and public finances, the agency said in its report.
Strong sovereign balance sheet, with sovereign assets held in Azerbaijan's state oil fund SOFAZ reached 49 percent of GDP at 2013 end, according to the report. The 2014 budget calls for a reduction in reliance on oil revenue in the form of transfers from SOFAZ.
Azerbaijan is estimated to have recorded a current account surplus of 17 percent of GDP in 2013, and Fitch forecasts it will continue to record surpluses.
Fitch assumes, the price of oil, Azerbaijan's main export and source of budget revenue, will average $105 per barrel in 2014, and $100 per barrel in 2015. Fitch assumes that oil production stabilizes in 2014 and 2015.
Azerbaijan has raised $1.25bn in its first international bond sale on March 10, which is a sign of the continued interest of the investors in emerging economy debt despite the market turmoil in nearby countries Russia and Ukraine.
Azerbaijan, which has an investment grade of Moody's and Fitch level, sold a benchmark 10-year bond with a five percent yield.
Investment banks Barclays, Deutsche Bank AG London, and Citigroup Global Markets Limited were selected as the government's managers for the first Eurobond issuance.
The order book had been oversubscribed at nearly $4bn, sources participating in the bond placement said.