Russia's VTB Bank has exposure to Azerbaijan Railways (ADY) debt, Yuri Soloviev, the bank's first deputy president, said on June 20 according to Reuters.
The announcement follows ADY last week saying it was mulling a restructuring of its debt, which stood at AZN288mn in mid-2015.
Soloviev did not elaborate on VTB's degree of exposure to the Azerbaijani state-owned railway company's debt. However, he said that ADY is "paying the loan, they are a quasi-sovereign entity and we have good dialogue".
State-owned International Bank of Azerbaijan (IBA), Azerbaijan's largest lender, defaulted on its foreign obligations in May, sparking fears over Azerbaijani state-owned companies' ability to service their foreign debts.
IBA said on June 19 it is modifying some of the debt restructuring terms offered to creditors. One group of creditors on June 13 filed an objection to the previous restructuring terms in a US court, saying the offer ran “roughshod over certain fundamental rights of IBA’s creditors”.
Having suffered through two years of economic recession amid low oil and gas prices, Baku appears less able and willing to support its state-owned companies and assist in servicing their debts.
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