Moody's assesses Azerbaijan's net creditor position as very strong

Azerbaijan's net creditor position is very strong, Moody's Investors Service says in its annual credit report on Azerbaijan.

"More than 90% of direct government debt has a maturity of at least 10 years, with no debt maturing within the next 5 years. Moreover, with foreign assets of $40 billion at end-2011 and external debt at $4.8 billion, Azerbaijan's net creditor position is very strong," the report said.

Azerbaijan's government financial strength is very high owing to its considerable stock of foreign assets and a strong government balance sheet, characterized by a very low debt burden (debt as a percentage of GDP was 10.5% at the end of 2011), and very comfortable debt affordability, with interest payments over revenues at 1.1%.
Azerbaijan also has a favourable debt structure, the report said.

In its annual credit report on Azerbaijan, Moody's Investors Service says that Azerbaijan's Baa3 government bond rating is largely based on the country's high government financial strength which has been driven by the boom in oil revenues in recent years.
"Although per capita GDP is rapidly rising, economic growth is vulnerable to the performance of the oil sector," the report said.

Azerbaijan's susceptibility to economic and financial event risk is also very low. Moody's believes that the government's sizable financial assets and strong balance sheet offers a significant buffer against a sustained drop in the price of oil.

Likewise, the relative absence of contingent liabilities due to the small size of the banking system (around 34% of GDP), as well as its limited integration with global financial markets, limit the risk of a financial shock having an adverse effect on the government's sovereign ratings.


/Trend/