ING: Azerbaijani bonds benefit from geopolitical stability, investment status

Azerbaijani sovereign bonds continue to attract investor interest, despite moderately narrowing spreads and limited upside potential, Report informs referring to an update from ING Group, the Netherlands' largest banking group.

The upgrade of Azerbaijan's credit rating by Moody's to Baa3 has elevated the bonds to Investment Grade status, significantly strengthening market confidence.

"Performance has been robust this year, with Moody"s rating upgrade to Baa3 bringing the sovereign to full IG status and positive peace progress with Armenia also boosting sentiment. Spreads have squeezed tighter to reflect the new rating, while fundamentals remain solid despite some weakening in the twin surpluses likely this year. Despite current valuations offering limited significant upside, AZERBJ 32s do continue to offer a pickup over split-rated peers such as Oman and Morocco, along with oil-exporting peer Kazakhstan, meaning we would still be comfortable holding the bonds, especially given the lack of supply out there," reads the update.