Moody's Rates Iraqi Govt Bonds

WHAT COULD MOVE THE RATING UP/DOWN

The rating could move up should political and geopolitical tensions reduce materially and sustainably. Over the longer term, greater economic and fiscal diversification which reduces the government's and the economy's dependence on oil would also be credit positive.

Conversely, a further intensification of domestic political struggle, unexpected gains by ISIL or a return to civil war would put downward pressure on the rating. The rating would also come under negative pressure should budget deficits remain wide and government debt fail to decrease, such as in a scenario of global oil prices staying below $50/barrel for the next five years, production falling off and the government failing to respond with adequate fiscal reforms.

GDP per capita (PPP basis, US$): 14,571 (2014 Estimate) (also known as Per Capita Income)

Real GDP growth (% change): -2.1 (2014 Estimate) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 1.6 (2014 Actual)

Gen. Gov. Financial Balance/GDP: -5.3 (2014 Estimate) (also known as Fiscal Balance)

Current Account Balance/GDP: -2.7 (2014 Estimate) (also known as External Balance)

External debt/GDP: not available

Level of economic development: Moderate level of economic resilience

Default history: At least one default event (on bonds and/or loans) has been recorded since 1983.

On 18 September 2015, a rating committee was called to discuss the provisional rating to the senior unsecured debt to be issued shortly by the Government of Iraq under Rule 144A in the US. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, the issuer's institutional strength/framework, the issuer's fiscal or financial strength, including its debt profile and the issuer's susceptibility to event risks.

The principal methodology used in this rating was Sovereign Bond Ratings published in September 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this rating action, if applicable.

(Source: Moody's)

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