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Moody's revises outlook on Azerbaijan

Moody's assigned a negative outlook on Azerbaijan'slong-term issuer ratings and senior unsecured debt ratings, which it confirmedat Ba1.

The April 29 outlook revision reflects the ongoing threat tothe country's credit profile as a result of weakening economic strength amid aworsening recession, caused by an economic slowdown in non-oil GDP sectors,increased stress in the Azeri banking sector, geopolitical risks and thepossibility of an economic dislocation from a further depreciation in theexchange rate, Moody's said.

The country's banking system could require additionalfinancial aid, as the currency devaluation led to outflows in local currencyand an increase in nonperforming loans, which stand at 20% of the sector'sgross loans, consequently weakening Azeri lenders' capital buffers, the agencynoted.

The ratings actions follow the completion of a reviewstarted Feb. 5, Moody's said.