Low Oil Price Threat to Iraq’s Eurobond Bid

By Simon Kent.

A recent report by Standard & Poor gave Iraq a B- foreign currency rating, indicating significant risk for investors, but nonetheless noted that in the short term, the economy would remain stable with 0.3% growth and longer term, up to 5% from rising oil output up to 2018.

That is the good news for Iraq, but little comfort for the country now as bond sale meetings may go ahead this month, according to Bloomberg. 

Their report cites an analyst at Global Evolution, a Denmark based firm who manage emerging market debt, noting that Iraq would likely have to pay “double digit interest” to attract investors in their Eurobond market debut.

In August, Iraq announced a $6 billion bond program to help finance the fight against ISIS amid falling oil prices, which have left the country exploring a number of different funding avenues, backed by a program of cuts and reforms.

Despite this outlook, Fitch Ratings B- for Iraq still place it above Greece (rated CCC, down from B-) and the Ukraine as a bond seller.

(Source: Bloomberg)

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