The International Bank of Azerbaijan (IBA) is talking to banks about a US$150m, one-year loan, banking sources said this week.


The deal will replace a US$200m, one-year loan which matured in April that was coordinated by Citigroup.


That maturity came shortly after Azerbaijan - which as an oil exporter has been hard hit by the depressed oil prices - was downgraded in March by Fitch to BB+ with a negative outlook.


Following the downgrade IBA took the decision to just repay the loan rather than try and tap the international markets, bankers said at the time.


"When the upcoming maturity occurred in early spring/summer, the situation was slightly less comfortable than it is now,” said one banker. "Since the last loan the bank has executed a number of strategies which should make investors more confident,” he said.


These include a change in management at IBA’s Russian subsidiary, the transfer of a number of IBA’s assets into a bad bank and in February IBA announced its authorized capital had been increase by M500m (US$303.4m).


"Things have slightly improved for the bank now we will see how the market reacts - they are asking for less money but the margins are still quite aggressive,” said the banker.


ING Bank, Citigroup, Raiffeisen Bank International and UniCredit Group were bookrunners and initial mandated lead arrangers on the 2015 loan, which paid a margin of 300bp over Libor. 

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