Update dependency Azure.Identity to 1.16.0

[dependencyupdates]

This PR contains the following updates:

Package	Change	Age	Adoption	Passing	Confidence
Azure.Identity (source)	1.15.0 -> 1.16.0

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Release Notes

Azure/azure-sdk-for-net (Azure.Identity)

v1.16.0

Compare Source

1.16.0 (2025-09-09)

Features Added

• Added a new DefaultAzureCredential constructor that accepts a custom environment variable name for credential configuration. This provides flexibility beyond the default AZURE_TOKEN_CREDENTIALS environment variable. The constructor accepts any environment variable name and uses the same credential selection logic as the existing AZURE_TOKEN_CREDENTIALS processing.
• Added DefaultAzureCredential.DefaultEnvironmentVariableName constant property that returns "AZURE_TOKEN_CREDENTIALS" for convenience when referencing the default environment variable name.
• AzureCliCredential, AzurePowerShellCredential, and AzureDeveloperCliCredential now throw an AuthenticationFailedException when the TokenRequestContext includes claims, as these credentials do not support claims challenges. The exception message includes guidance for handling such scenarios.
• When AZURE_TOKEN_CREDENTIALS or the equivalent custom environment variable is configured to ManagedIdentityCredential, the DefaultAzureCredential does not issue a probe request and performs retries with exponential backoff.

Bugs Fixed

• Fixed AzureDeveloperCliCredential hanging when the AZD_DEBUG environment variable is set by adding the --no-prompt flag to prevent interactive prompts (#​52005).
• BrokerCredential is now included in the chain when AZURE_TOKEN_CREDENTIALS is set to dev.
• Fixed an issue that prevented ManagedIdentityCredential from utilizing the token cache in Workload Identity Federation environments.
• Fixed a bug in DefaultAzureCredential that caused the credential chain to be constructed incorrectly when using AZURE_TOKEN_CREDENTIALS in combination with DefaultAzureCredentialOptions.

Other Changes

• The BrokerCredential is now always included in the DefaultAzureCredential chain. If the Azure.Identity.Broker package is not referenced, an exception will be thrown when GetToken is called, making its behavior consistent with the rest of the credentials in the chain.
• Updated Microsoft.Identity.Client dependency to version 4.76.0.
• Updated Microsoft.Identity.Client.Extensions.Msal dependency to version 4.76.0.

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