Moody's may upgrade Azerbaijan's credit rating, ING Group, the Netherlands' largest financial corporation, has forecasted this possibility, SİA reports.
ING believes that while trade and budget surpluses are expected to weaken, the country's credit fundamentals remain strong due to significant foreign exchange reserves and limited external financing needs. Azerbaijan's ratings are moving towards investment grade (IG), with Fitch raising its rating to BBB- last July and Moody's providing a positive outlook. This should align official ratings with market valuations and pricing. ING expects that Moody's could upgrade Azerbaijan’s credit rating this year, which would grant the country its second investment-grade rating, bringing the composite rating to IG.
Additionally, ING notes that progress towards a peace agreement with Armenia has had a somewhat positive impact on the markets. However, Azerbaijan's bond spreads are no longer particularly attractive compared to other BBB-rated countries. They also believe that the likelihood of the government issuing new Eurobonds is low.
Note that "Fitch Ratings" and "S&P Global Ratings" consider ratings of BBB- and above to be investment grade, while "Moody’s" regards ratings of Baa3 and higher as investment grade. Achieving an investment grade rating would make Azerbaijan a more reliable borrower in international financial markets.
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