Moody's keeps SOCAR's credit rating unchanged

International credit rating agency Moody's Ratings has reaffirmed the Baa3 long-term issuer rating of Azerbaijan's State Oil Company (SOCAR), AzerNEWS reports.

In its latest report, the agency said the rating reflects SOCAR's baseline credit assessment (BCA) of ba2, Azerbaijan's Baa3 foreign-currency sovereign rating, the government's full ownership of the company, the strong financial interdependence between SOCAR and the state, and the high likelihood of government support should the company encounter financial difficulties.

The agency said SOCAR's baseline credit profile is supported by the company's strategic role in Azerbaijan's oil and gas sector and its importance to the national economy. Moody's also highlighted the company's solid financial performance, strong credit metrics, and close ties with the Azerbaijani government, which maintains substantial financial reserves and has the capacity to provide support if necessary.

At the same time, Moody's pointed to several factors that constrain SOCAR's credit profile. These include declining hydrocarbon production, the company's growing mergers and acquisitions activity, corporate governance considerations, exposure to fluctuations in global oil prices, and the high concentration of its operations in Azerbaijan.