 | ||
Iraq to seek credit rating ahead of jumbo bond issue | ||
| 09/05/2015 | ||
Finance minister of Iraq, Hoshiyar Zebari said, "We started the process and the banks are also trying to help us in that direction.” Iraq has said it will issue $5 billion of debt in its first international bond sale for nine years. Its need for cash is acute; the government has projected a budget deficit of about $25 billion this year, in a budget of roughly $100 billion. Iraq presently lacks a good credit rating. If it can obtain that from a major agency, then it could help to persuade global fund managers and banks to subscribe to the issue. Zebari said Iraq was trying to approach two or three rating agencies, which he did not name. It has been discussing its bond issue plan with Citibank and Deutsche Bank. The process of obtaining a credit rating could be a delicate one for Iraq, requiring it to open its books to the agencies and disclose new information on its finances. Zebari did not say when he expected the process to be completed. Iraq's huge oil reserves in its southern fields, which have not been touched by the Islamic State insurgency, are expected to draw buyers to its bonds. But many fund managers think it would struggle to sell $5 billion in a short space of time, even with generous pricing. Zebari also stated, "We have in the budget a commitment to issue $6 billion. So this is the low - this is how we plan to cover our deficit. But there’s no way we can do it in one tranche.” It is noteworthy that Iraq has an outstanding U.S. dollar bond, which is expected to mature in 2028. In addition to the international bond issue, Iraq has introduced or is planning other fiscal measures including a local currency bond issue to banks, taxes on some consumer goods and public wage cuts. It has also been considering whether to ask for aid from the International Monetary Fund. | ||
Last Update:: 09/05/2015 | ||
Iraq Directory |