Fitch Raises Azerbaijan Rating to Investment Grade

Fitch Raises Azerbaijan Rating to Investment Grade
# 21 May 2010 09:34 (UTC +04:00)
The upgrade “reflects the rapid increase and prudent management of oil revenues that are being used to build a strong public and external net creditor position,” said Andres Klaar, associate director at Fitch Sovereigns Group, in a statement today. “The strong sovereign balance sheet provides a powerful buffer against potential shocks emanating from the country’s structural weaknesses.”

Fitch raised Azerbaijan’s long-term foreign and local currency issuer default ratings to BBB- from BB+. It also upgraded Azerbaijan’s country ceiling to BBB- from BB+ and raised its short-term foreign currency IDR to ‘F3’ from ‘B’. The sovereign rating is now investment grade.

Azerbaijan, which relies on oil revenue to generate more than a third of its economic output and more than 90 percent of exports, boasted a current account surplus of 20.7 percent of gross domestic product last year and inflation of 1.5 percent, according to Fitch.

Still, Azerbaijan’s oil reserves will be depleted in about 18 years, compared with about 54 years in Kazakhstan, Fitch said.

“The relatively limited life span of the oil windfall underscores the importance of both prudent fiscal management and diversification of the economy,” Fitch said.

Rating of Fitch rating for CIS countries:

Emitent

Long-term default rating in foreign currency

Long-term default rating in national currency

Forecast

Short-term default rating in national currency

Country limit

Dates

Russia

BBB

BBB

Stable

F3

BBB+

22.01.2010

Azerbaijan

BBB-

BBB-

Stable

F3

BBB-

20.05.2010

Kazakhstan

BBB-

BBB

Stable

F3

BBB

16.12.2009

Armenia

BB-

BB-

Stable

B

BB

13.08.2009

Georgia

B+

B+

Stable

B

BB-

26.08.2009

Ukraine

B-

B-

Stable

B

B-

17.03.2010

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