BAKU, Azerbaijan, December 25. S&P sees a
very high likelihood that the State Oil Company of Azerbaijan
Republic (SOCAR) would receive government support and therefore has
revised to positive its outlook on the ‘BB’ rating on SOCAR, Trend
reports via the S&P.


The rating agency notes that the positive outlook on SOCAR
follows the similar action on our sovereign rating on Azerbaijan,
and reflects several factors.


"First, tensions between Azerbaijan and Armenia have eased
materially as a result of progress toward peace and
defense-spending cuts in the 2026 budgets of both countries. This
shift has reduced the risk of renewed conflict and, if sustained,
is likely to support investor confidence and facilitate stronger
medium-term growth by improving regional trade and transport links
across the South Caucasus. Azerbaijan maintains exceptionally
strong fiscal and external buffers, supported by very large assets
managed by the State Oil Fund of the Republic of Azerbaijan
(SOFAZ). The sustained net general government asset position and
low public debt provide significant shock-absorption capacity and
help the economy mitigate hydrocarbon price volatility, supporting
macroeconomic stability," reads the latest report by S&P.


The rating agency foresees Azerbaijan’s credit fundamentals
improving over the medium term if geopolitical risks recede and
fiscal buffers are preserved.







"While a formal peace treaty has yet to be finalized, recent
commitments and early implementations mark the most constructive
phase in bilateral relations in decades, and could improve the
investment environment and raise growth potential."


On Nov. 12, 2025 S&P raised its rating on SOCAR to ‘BB’ from
‘BB-’, following the revision to SOCAR’s SACP to ‘bb-’ from
‘b’.


"This was a result of a material improvement in SOCAR's
financial policy transparency and disclosure levels, improving our
clarity about the company’s performance. SOCAR is fully owned and
controlled by the government of Azerbaijan and we see a very high
likelihood of extraordinary support from the government if SOCAR
were to face financial issues. Therefore, the recent improvement in
the sovereign’s credit quality, notably its financial capacity to
support state-owned companies like SOCAR, boosts the company’s own
credit quality," said S&P.