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Azerbaijan Weekly Market Watch

Azerbaijan Weekly Market Watch

Galt&Taggart Publishes Report on Main Developments that Took Place in Azerbaijani Economy Last Week:

Oil extractiondown at the Azeri-Chirag-Gunashli oil field in 3Q16 In 3Q16, oil production was down 2.5% y/y to 622,359 barrels per day at the Azeri-Chirag-Gunashli (ACG) oil field, operated by the BP-led consortium, as operations at one of the platforms on the field (Deepwater Gunashli) were suspended for 11 days for scheduled maintenance in September 2016. In 9M16, however, oil extraction at ACG is up 0.6% y/y to 644,000 barrels per day.

Gas production up 25.4% y/y in 3Q16 After four quarters of contraction, gas production from Shah Deniz and ACG (associated gas) increased 25.4% y/y to 3.3 bcm in 3Q16. In 9M16, gas production was up 0.7% y/y to 10.0bcm.

CAPEX down in BP-led projects in 3Q16 BP-led consortium spent US$1.5bn (-25.2% y/y or -11.1% q/q) in capex in Azerbaijan in 3Q16 for ACG, Shah Deniz, Baku-Tbilisi-Ceyhan pipeline, and South Caucasus Pipeline. The drop in capex was driven by lower investment in ACG and Shah Deniz fields. CAPEX was down 18.5% y/y in 9M16 to US$ 4.7bn

IBAR rating affirmedat BB On November 22, 2016, Fitch Ratings affirmed International Bank of Azerbaijan (IBAR) at BB with negative outlook on the expectations of continued strong sovereign support for the bank.

Oil price: Brent oil price was up 2.0% w/w to US$ 47.8/bbl (up 3.6% y/y), while WTI oil price decreased 0.3% w/w to US$ 45.6/bbl (up 9.0% y/y). In AZN terms, Brent oil price was up 2.6% w/w to AZN 84.4 (up 74.8% y/y).

Exchange rate: On November 25, 2016, Central Bank’s AZN/US$ rate was 1.7196 (+0.6% w/w) and AZN/EUR rate was 1.8176 (+0.3% w/w). At Bloomberg AZN/US$ was trading at 1.7663 (+0.6% w/w) while AZN/EUR was trading at 1.8462 (+1.5% w/w).

Monetary policy rate: Monetary policy rate was unchanged at 15.0%.

Corporate Eurobonds: State Oil Company of Azerbaijan (SOCAR) Eurobond (SOIAZ 03/30) closed at 6.9% yield, trading at 100.7 (+0.8% w/w). International Bank of Azerbaijan Eurobonds (IBAZAZ 06/19) were trading at 98.9 (+0.0% w/w), yielding 6.1%.

Azerbaijan Sovereign Eurobonds (AZERBJ 03/24) closed at 98.5 (+0.7% w/w) at 5.0% yield to maturity.