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Don't Bet on Calm in Azerbaijan's Bond Market

  • Moody’s warns restructuring is negative for nation’s oil giant
  • Raiffeisen sees sovereign yields climbing 40bps on debt talks

Investors betting Azerbaijan’s debt problems will be contained at the nation’s biggest bank could be in for a shock.

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.