BAKU, Azerbaijan, December 6. On Dec. 5, 2025, S&P Global Ratings revised its outlook on Azerbaijan to positive from stable, Trend reports via S&P.
“At the same time, we affirmed our 'BB+/B' long- and short-term foreign and local currency sovereign credit ratings on Azerbaijan. We subsequently withdrew the ratings at the issuer's request,” the rating agency said in its latest report.
At the time of the withdrawal, the positive outlook reflected S&P’s view that tensions between Azerbaijan and Armenia have eased, with a sustained de-escalation, progress toward a peace agreement, and planned defense-spending cuts in both countries' 2026 budgets.
“These developments lower conflict-related tail risks and, if sustained, could strengthen investor confidence and support medium-term growth through improved regional connectivity. Azerbaijan also continues to maintain exceptional fiscal and external buffers, anchored by substantial assets managed by the sovereign wealth fund, the State Oil Fund of the Republic of Azerbaijan (SOFAZ), a persistent net general government asset position, and low public debt, which provide significant shock-absorption capacity,” the report says.
In S&P’s view, Azerbaijan's credit fundamentals will strengthen over the medium term, supported by meaningful progress in the peace process with Armenia and the continued preservation of exceptional fiscal and external buffers.
“The Aug. 8, 2025, U.S.-brokered joint declaration committed Azerbaijan and Armenia to mutual recognition, the renunciation of territorial claims, accelerated border delimitation, and the reopening of regional transport routes, marking the most constructive phase in relations for decades. Although not yet a formal peace treaty, implementation has already begun to yield tangible outcomes. In November 2025, a train carrying around 1,000 tons of Kazakh wheat transited through Azerbaijan to Armenia for the first time in more than 30 years, indicating a gradual normalization of regional economic connectivity. Both governments also plan to reduce defense spending in their 2026 budgets, signaling increased confidence in the de-escalation process. If sustained, these developments could support confidence, improve the investment environment, and raise medium-term growth potential through deeper trade and transport integration across the South Caucasus,” said the rating agency.