ARDNF - Azərbaycan Respublikası Dövlət Neft Fondu

General information

The State Oil Fund's assets are managed in accordance with the "Rules on management of foreign currency assets of the State Oil Fund of the Republic of Azerbaijan" approved by Presidential Decree No. 511 of June 19, 2001 and amended by Presidential Decree No. 607 dated December 21, 2001, No. 202 dated March 1, 2005, No. 216 dated February 10, 2010 and No. 519 dated October 27, 2011, and "Investment Policy of the State Oil Fund of the Republic of Azerbaijan" approved by Presidential decrees on an annual basis.

According to these Rules, the purpose of management of the Oil Fund’s foreign currency assets is to hold foreign currency assets of the Oil Fund securely and to generate revenues by effective management.

Correspondent accounts of the Oil Fund outside the Republic of Azerbaijan (abroad) should be opened at the banks with a long-term credit rating of not less than:

“AA-” based on Standard & Poor`s credit rating scale
“Aa3“ based on Moody`s credit rating scale
“AA-” based on Fitch credit rating scale

The counterparts of the Oil Fund in international financial markets for the long-term obligations shall be commercial banks and other financial institutions with a long-term investment credit rating of at least of Standard & Poor’s, or Fitch or Moody’s.

Custodian (depositary) services for securities are provided to the Oil Fund by central (national) banks, commercial banks and other financial institutions with long-term credit ratings of not less than:

“AA-” based on Standard & Poor`s credit rating scale
“Aa3“ based on Moody`s credit rating scale
“AA-” based on Fitch credit rating scale

The Oil Fund may invest in assets denominated in currencies of:

Member countries of the G7 (the United States of America, the Federal Republic of Germany, the United Kingdom of Great Britain and Northern Ireland, France, Italy, Canada and Japan);
Member countries of the European Monetary Union;
Russia and Turkey;
Countries with a long-term credit rating (sovereign debt rating) of not less than “A” (Standard & Poor’s, Fitch) or “A2” (Moody’s).

The investments in assets denominated in the currencies of the countries not mentioned above may be made only after hedging against currency fluctuations with respect to USD. Relative weights of the currencies in the investment portfolio of the Oil Fund are defined by the Investment policy of the Oil Fund.

The following assets may be included in the investment portfolio of the Oil Fund:

Deposits in the central and commercial banks and other financial institutions;
Debt obligations issued by the governments, government agencies, international financial organizations, commercial organizations and other institutions with long term investment grade credit ratings (Standard & Poor’s or Fitch or Moody’s);
Debt obligations with long-term investment grade credit ratings (Standard & Poor’s or Fitch or Moody’s) issued by governments, government agencies, international financial organizations, commercial organizations and other institutions;
Investments in stocks included in major international equity indices;
Shares of mutual and alternative investment funds;
Gold bars conforming to the requirements of the London Bullion Market Association;
Real Estate;
Non-investment grade debt obligations or deposits with credit rating of not less than “BB-” (Standard & Poor`s or Fitch) or “Ba3” (Moody`s). Maximum capital allocated to those investments should not exceed 5% of the total value of the investment portfolio. In this case, the counterparty banks of the Oil Fund providing custodian (depositary) services and holding correspondent accounts for Oil Fund may have non-investment grade credit rating (not less than BB-” (Standard & Poor`s, Fitch) or Ba3” ( Moody`s)).

Operations such as swap, forward, futures may only be carried out for the purpose of minimizing price or rate change risks (hedging), or for optimization of currency composition of the investment portfolio and assets structure.