BAKU

(Read the full text of the report on fitchratings.com)

Fitch Rating has revised Azerbaijan’s Mortgage and Credit Guarantee Fund’s Outlook to Stable from Negative while affirming the fund’s long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘BB+’.

The rating actions followed the revision of Azerbaijan’s Outlook to Stable from Negative.

Fitch has rated the fund using its Government-Related Entities (GRE) criteria, applying a top-down approach, which resulted in the ratings being equalised with the sovereign.

“This is based on our assessment of the strength of linkage and incentive to support by the government, which reflects the strong ability and willingness of Azerbaijan to provide support to the fund,” the rating agency said.

The fund has a score of 50 points under our GRE criteria, which irrespective of its Standalone Credit Profile, leads to the rating equalisation with those of Azerbaijan.

Fitch said that factors that could, individually or collectively, lead to positive rating action/upgrade:

Fitch said that positive rating action on the sovereign ratings would lead to the same rating action on the fund’s ratings provided its linkage with the sovereign remains unchanged.

It added that negative rating action on the sovereign ratings would lead to a corresponding negative action on the fund’s ratings.

The fund’s IDRs are directly linked to the Republic of Azerbaijan’s.

Azerbaijan’s Mortgage and Credit Guarantee Fund is a member of the European Association of Guarantee Institutions, which has 48 member organisations operating in 31 countries across Europe. Its members are mutual, private sector guarantee schemes as well as public institutions, which are either guarantee funds or development banks with a guarantee division. They all have in common the mission of providing loan guarantees for SMEs who have an economically sound project but cannot provide sufficient bankable collateral.