S&P upgrades SOCAR rating outlook to positive

International ratings agency Standard & Poor's has raised its rating outlook for the State Oil Company of Azerbaijan (SOCAR) from stable to positive, affirming the company's long-term credit rating at "BB," Report informs referring to S&P.

"The positive outlook on SOCAR reflects the possibility that we could upgrade the company if Azerbaijan's creditworthiness improved and SOCAR's credit metrics and financial policy remained commensurate with a ‘bb-" stand-alone credit profile (SACP)," reads the update.

On November 12, 2025, S&P upgraded SOCAR's rating to "BB" from "BB-" after revising its 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," the agency said.

"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.

We foresee 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," S&P noted.

"Rating upside in the next 12 months for SOCAR hinges on two main factors. The first would be a continuous improvement in Azerbaijan's creditworthiness, as this would indicate increasing financial capacity to support SOCAR if need be. The second is SOCAR's SACP remaining at least at 'bb-', as it is now, and the company's financial policy and credit metrics remaining commensurate with our thresholds," the agency added.