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Azerbaijan’s Ratings Raised to Investment Grade by Moody’s

Moody's Investors Service raised Azerbaijan's foreign sovereign credit rating by one notch to an investment grade Baa3, citing a combination of rapid foreign reserve accumulation and improvement in the non-oil sector of its economy.

"High oil prices have helped the government accumulate considerable foreign assets in both SOFAZ, the country's sovereign wealth fund, and the reserves of the CBA, which amounted to around $40 billion at the end of 2011 (75 percent of GDP)," Moody's said in a statement.

Government spending to improve the infrastructure of the country of about 9 million people in the South Caucasus was cited as a secondary reason for the upgrade. Moody's has a stable outlook on the credit.

"This strong performance has helped the economy avoid an outright contraction in output as oil production decreased sharply due to temporary, maintenance-related, disruptions in the country's main Azeri-Chirag-Guneshli oilfields during 2011," Moody's said, adding it believed there will continue to be support for developing a diversified economy.

Last year, both Standard & Poor's and Fitch Ratings put Azerbaijan at investment grade with a BBB-minus rating. S&P has a stable outlook, while Fitch has a positive outlook for the country's credit.

Source: Reuters and Bloomberg

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