Azerbaijan

Investors betting Azerbaijan’s debt problems will be contained at the nation’s biggest bank could be in for a shock, Bloomberg News reported. Sovereign yields may jump 40 basis points next week as more details emerge about the International Bank of Azerbaijan’s plan to swap its defaulted debt into new sovereign notes, according to Raiffeisen Bank International AG. On Thursday, Moody’s Investors Service warned the restructuring was “credit negative” for the state oil champion, known as Socar, which keeps about 40 percent of its cash and equivalents at the defaulted lender.

International Bank of Azerbaijan, the energy exporting country's biggest lender, said on Friday it needed to restructure more than $3 billion of its debt, most owed to foreign creditors, to tackle bad loans left over from the slump in oil prices, the International New York Times reported on a Reuters story. The state-controlled bank announced on Thursday it was suspending payments on some liabilities and seeking creditors' support for restructuring. The news sent IBA's dollar-denominated bond tumbling to its lowest level in over a year.

The largest bank in Azerbaijan has halted its foreign debt payments and will start restructuring negotiations with creditors after a currency crisis in the Caspian Sea nation drove the lender to the brink of collapse, Bloomberg News reported. The International Bank of Azerbaijan missed a principal and interest payment on a $100 million subordinated loan on May 10, according to an emailed statement from the government-owned lender on Thursday.

Azerbaijan's mid-sized lender Bank Standard has been declared bankrupt, the Azeri Deposit Insurance Fund said on Thursday, Reuters reported. The bank's license was revoked from Oct. 1 and the fund operated as its liquidator. The fund received 460 million manats ($288 million) in state credits from the central bank on Tuesday in order to give compensation to those clients who had insured deposits at Bank Standard. Read more. (Subscription required.)

If any world leader has surfed the wave of the oil boom, it is Ilham Aliyev, the Financial Times reported. In 2003, just as oil prices began to soar, Mr Aliyev succeeded his father as president of Azerbaijan. Over the next decade he presided over an era of rising prosperity that transformed Baku into a kind of Dubai on the Caspian and imbued the country with the newfound confidence to project itself on the world stage. But Azerbaijan’s oil boom has come to a juddering halt.

Azerbaijan is to impose a 20 per cent tax on transactions to remove cash from the country, as the oil-dependent government tries to contain a currency collapse that has triggered public protests. Baku’s imposition of capital controls is one of the most extreme measures taken so far by former Soviet countries as the region grapples with a crisis triggered by the plunge in oil prices to 13-year lows, the Financial Times reported. The manat has tumbled by more than a third since the central bank abandoned its peg to the dollar last month.