Iraq intends to issue government bonds worth 2 billion dollars in the next three months.
Ali al-Alak, governor of the Iraqi central bank, in an interview yesterday in Baghdad reported by Reuters, said he hoped for a 5% yield, down from the 11% originally requested by investors thanks to the successes against Daesh and with the help of the Central Bank and the International Monetary Fund.
The operation should be managed by some banks including Standard Chartered, Deutsche Bank and Citi.
It has been ten years since Baghdad last tried to issue international debt securities on the market. In 2006, approximately $2,5 billion of bonds were placed with a 2028 maturity and a 5,8% coupon. As of today, those stocks are trading at a value of 70 cents on the dollar, while the yield has rocketed to 11,6%.
Of course, investing in Iraq is currently not considered good business (B- by Standard & Poor's six levels below investment-grade). But international loans could arrive in the near future that could help change the current economic scenario. In detail, between June and December Baghdad could receive a 7 billion dollar loan whose guarantors would be the United States and the Central Bank. Over the next 3 years, 15 billion in aid will be provided by the Government.
