S&P Global Ratings has revised its outlook on Azerbaijan to positive from stable. At the same time, the Agency affirmed the country's long- and short-term foreign and local currency sovereign credit ratings at ‘BB+/B’, SİA reports, citing S&P Global Ratings.
According to the information, the ratings were subsequently withdrawn at the issuer’s request.
S&P noted that, at the time of withdrawal, the positive outlook reflected easing tensions between Azerbaijan and Armenia, sustained de-escalation, progress toward a peace agreement, and planned reductions in defense spending in both countries’ 2026 budgets. The Agency said these developments reduce conflict-related risks and, if maintained, could strengthen investor confidence and support medium-term economic growth through improved regional connectivity.
The report highlighted that Azerbaijan continues to hold exceptional fiscal and external buffers, backed by substantial assets of the State Oil Fund of the Republic of Azerbaijan (SOFAZ), a persistent net general government asset position, and low public debt, which provide “significant shock-absorption capacity.”
S&P added that the outlook could have been revised back to stable if fiscal balances weakened significantly, for example, due to faster-than-expected declines in oil production leading to lower hydrocarbon revenues and wider budget deficits.
At the same time, the Agency said the ratings could have been raised if Azerbaijan had maintained strong fiscal and external surpluses and if normalization with Armenia had progressed in a lasting and credible manner.
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