Azerbaijan's long-term IDRs affirmed at 'BB+' with stable outlook - Fitch

Fitch Ratings said it has affirmed Azerbaijan's long-term foreign and local currency issuer default ratings (IDR) at 'BB+' with a stable outlook citing support from the country's strong and sustainable economic growth, low government and external debt ratios and a large current account surplus, underpinned by rapidly rising oil and gas production.

The ratings agency also affirmed Azerbaijan's short-term foreign currency IDR at 'B' and country ceiling at 'BB+'.

Fitch said Azerbaijan is, however, facing rising inflationary pressure because of an accommodating monetary policy in the face of the positive terms of trade shock from the development of the energy sector and high oil prices.

The ratings agency said it is also concerned that rapid credit growth in one of the weakest banking systems among sovereign rated by the agency, with limited foreign ownership could create a contingent liability for the sovereign.

Azerbaijan will hold presidential elections in the second-half of 2008 and Fitch said it expects Ilham Aliyev to remain in power for a second term.

/Thomson Financial/