Fitch raises IBA rating
Fitch Ratings has upgraded the long-term Issuer Default Rating
(IDR) of the International Bank of Azerbaijan (IBA) in foreign
currency from grade BB+ to BBB-.
According to Fitch, these rating actions follow the increase of Azerbaijan’s long-term IDR from the grade BB+ to BBB- with "stable" forecast of May 20, 2010.
The IBA’s rating upgrade reflects Fitch's view of the high probability of support from national authorities as appropriate in view of the bank’s importance to Azerbaijan’s banking system and the national economy as a whole, as well as the fact that the majority owner of the bank (50.2%) is the Ministry of Finance. In addition, the rating action takes into account the moderate size of the bank relative to available state resources to support this financial institution, given that at the end of the first quarter of 2010, total liabilities of the IBA made up 4.7 billion manats ($5.87 billion), or 14% of the GDP in 2009 and 46% of the revenue of the central government in 2009.
On the same date, the currency liabilities of the bank, totaling $3.7bn, accounted for 17% of the total sovereign wealth funds and official foreign exchange reserves and the foreign portion of these liabilities (equivalent to $1.3bn) remained at a moderate level of 6% from the size of sovereign wealth funds and currency reserves.
The IBA’s short-term foreign currency IDR has been raised from grade B to F3, while the individual rating was confirmed at D/E. Support rating was upgraded from 3 to 2. The level of support of the long-term IDR was upgraded from BB+ to BBB-.*
According to Fitch, these rating actions follow the increase of Azerbaijan’s long-term IDR from the grade BB+ to BBB- with "stable" forecast of May 20, 2010.
The IBA’s rating upgrade reflects Fitch's view of the high probability of support from national authorities as appropriate in view of the bank’s importance to Azerbaijan’s banking system and the national economy as a whole, as well as the fact that the majority owner of the bank (50.2%) is the Ministry of Finance. In addition, the rating action takes into account the moderate size of the bank relative to available state resources to support this financial institution, given that at the end of the first quarter of 2010, total liabilities of the IBA made up 4.7 billion manats ($5.87 billion), or 14% of the GDP in 2009 and 46% of the revenue of the central government in 2009.
On the same date, the currency liabilities of the bank, totaling $3.7bn, accounted for 17% of the total sovereign wealth funds and official foreign exchange reserves and the foreign portion of these liabilities (equivalent to $1.3bn) remained at a moderate level of 6% from the size of sovereign wealth funds and currency reserves.
The IBA’s short-term foreign currency IDR has been raised from grade B to F3, while the individual rating was confirmed at D/E. Support rating was upgraded from 3 to 2. The level of support of the long-term IDR was upgraded from BB+ to BBB-.*
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