Fitch affirms Azerbaijan mortgage fund's "BBB-" rating with stable outlook

International credit rating agency Fitch Ratings has affirmed the long-term issuer default ratings (IDRs) of Azerbaijan's Mortgage and Credit Guarantee Fund (ACGF) at "BBB-" in both foreign and local currencies, maintaining a Stable outlook.

Fitch said the fund's credit profile is closely linked to Azerbaijan's sovereign rating, which also stands at "BBB-" with a Stable outlook, Caliber.Az reports via local media. 

According to the agency, the ACGF plays a central role in implementing the Azerbaijani government's policy of expanding access to affordable housing.

"The fund plays a key role in implementing the government’s policy to provide the population with affordable housing," Fitch said.

The agency also assessed the likelihood of extraordinary government support for the fund as "virtually guaranteed," citing its strategic importance and strong state backing.

The fund's financial position continues to benefit from regular government support. During 2024 and 2025, it received capital injections totalling 172.7 million manats to finance social mortgage programs. This year, the government allocated a further 100 million manats, primarily for social mortgages and subsidies for small and medium-sized enterprises (SMEs). Functions related to entrepreneurship support were transferred to another government agency in June 2026.

Fitch noted that the Central Bank of Azerbaijan supports the fund through a bond repurchase mechanism and currently holds around 80% of all ACGF bonds in circulation. The fund is also exempt from income tax, while its bonds benefit from preferential risk weighting, making them more attractive to domestic banks.

The agency said the ACGF remained profitable in 2025, with net profit rising to 26.8 million manats from 23.2 million manats a year earlier, driven by the expansion of its mortgage portfolio.

Asset quality also remained strong, with non-performing loans accounting for less than 0.1% of the fund's total mortgage and leasing portfolio.

According to Fitch, the ACGF holds a dominant position in Azerbaijan's mortgage market, accounting for approximately 80% of household mortgage lending in the country.

The Mortgage and Credit Guarantee Fund operates as a non-profit state organisation. Under Azerbaijani law, it can only be liquidated or reorganised by presidential decree, while its activities are overseen by a supervisory board comprising representatives of the Presidential Administration, government ministries and the Central Bank.

By Sabina Mammadli