Iraq Plans New Bond Issuance

By Simon Kent.

Iraqi Central Bank Governor Ali Al-Alak has said that Iraq is issuing bonds to the value of around $2 billion in the next few months, following last year’s aborted issuance after investors demanded too high a yield.

At the time, investors demanded an 11% yield on the bonds, and the issuance was handled by Citigroup, Deutsche Bank and JPMorgan Chase. The new reasoning for selling debt now is the hope of the Iraqi government that the World Bank, IMF and other lenders will be able to cover a significant percentage of Iraq’s growing deficit, while defence expenditure is brought down as ISIS fall back, and oil prices eventually rebound.

In March, boutique investment bank Exotix Partners issued a “buy” alert on Iraqi benchmark U.S.-dollar 2028 bonds, taking into account Iraq’s low oil extraction cost and projected increases in production.

According to the CBI Governor, there remains the possibility that Iraq can get World Bank and IMF guarantees to cover the bond sale, and it is hoped this will hold the yield at 5%.

(Source: Arab News)

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