By John Lee.
Boutique investment bank Exotix Partners has issued a “buy” alert on Iraqi benchmark U.S.-dollar 2028 bonds on Tuesday, following a “sell” notice in September.
The company says:
“It seems that an extra level of country risk is being embedded in Iraq specifically, perhaps because the market views its debt as unsustainable. Having once traded at only a small discount to other commodity exporters, the 2028s are now over 200 basis points wide of our basket.”
The bonds were trading at a cash price of 66.57 cents to the dollar (12.55 percent yield) on Tuesday, compares with an average yield of 8.98 percent for other oil-exporting sovereigns in Exotix’s universe, according to a report from CNBC.
They reached an all-time low in December 2008 of around 42 cents to the dollar, and made a partial recovery from a recent low of roughly 59 cents in mid-January 2016.
Exotix sees “fair value” close to 75 cents with a yield of 10.6 percent.
(Bonds image via Shutterstock)