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Fitch: Restructuring of biggest Azerbaijani bank won’t affect ratings of SOCAR, Azerenergy

Tuesday, May 30
The restructuring of the International Bank of Azerbaijan (IBA) will not affect the ratings of Azerbaijan’s state oil company SOCAR and Azerenergy JSC, according to a report of the international ratings agency, Fitch Ratings.

SOCAR is rated ‘BB+’ with a ‘Negative Outlook’, says the report.

Fitch Ratings says Azerbaijan’s incentive to support SOCAR in case of need is still strong.

“We assume that the share of state-guaranteed debt will remain fairly stable in the medium term and there are no plans at present to privatize Azerenergy. State guarantees for Azerenergy’s debt are included in the government’s debt,” says the report.

“Following the decree signed at end-2015, the state intends to provide equity injections of $172 million and 204 million euros to Azerenergy to assist the company in repaying its foreign currency loans over 2016-2025,” says the report. “The government also agreed to provide a 360 million manats low interest, long-term loan to Azerenergy so that it can pay its tax due.”

Earlier, the IBA commenced a process of voluntary debt restructuring as part of its rehabilitation. The bank has filed an appeal to the New York court to aid the restructuring of $3.34 billion in debt. Under the court’s decision made on May 12 2017, foreign creditors will not be able to make claims against the IBA assets during the process of voluntary restructuring of the bank’s foreign liabilities.

Recently, a meeting of the leadership of the IBA, Azerbaijan’s Ministry of Finance and Financial Market Supervisory Authority (FIMSA) with foreign creditors was held in London. The bank’s management offered creditors several options for restructuring its obligations. The IBA’s total debt to foreign creditors is $3.3 billion.

The International Bank of Azerbaijan has been operating since 1992 and is one of the country’s two state-owned banks.