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S&P Assigns ‘B-/B’ Ratings To Republic of Iraq; Outlook Stable


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S&P Assigns ‘B-/B’ Ratings To Republic of Iraq; Outlook Stable September 4, 2015

By Bloomberg

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Press Release: S&P Assigns ‘B-/B’ Ratings To Republic of Iraq; Outlook Stable



The following is a press release from Standard & Poor's:
OVERVIEW

-- In our view, Iraq faces security and institutional risks that are among
the highest of all rated sovereigns--stemming primarily from its war with
ISIS--as well as significant fiscal and external pressures due to the sharp
fall in oil prices in the second half of last year.
-- However, Iraq benefits from massive oil reserves and high oil exports.
Projected large increases in oil production will, in our view, support economic
growth and help alleviate fiscal and external pressures over the medium term.
-- We are assigning our 'B-/B' long- and short-term foreign and local
currency sovereign credit ratings to Iraq.
-- The stable outlook is premised on our expectation that fiscal and
external deficits will not worsen beyond our forecasts and that the war with
ISIS will be contained.

RATING ACTION

On Sept. 3, 2015, Standard & Poor's Ratings Services assigned its 'B-'
long-term foreign and local currency sovereign credit ratings on the Republic
of Iraq. The outlook is stable. At the same time, we assigned our 'B'
short-term foreign and local currency ratings. The transfer and convertibility
(T&C) assessment is 'B-'. Iraq is the 130th sovereign rated by Standard &
Poor's.

RATIONALE

In our view, the rating on Iraq is constrained by its war with the Islamic
State of Iraq and Syria (ISIS); political institutions that are in an early
stage of development; and sectarian divisions between the Sunni, Shia, and
Kurdish ethnic groups. ISIS controls large areas of the north and west of the
country including Iraq's second-largest city, Mosul. Nevertheless, crucially,
over 85% of Iraq's oil fields and production are located in the south of the
country close to Basra, the main port for crude exports. These are
Shia-controlled areas at some distance from the fighting. Our rating assumes
that the government will remain in control of these assets. They are the key
supports for the rating.

Iraq has the world's fifth-largest proven crude oil reserves and is the
second-largest oil exporter in the Organization of Petroleum Exporting
Countries (OPEC). Oil dominates the Iraqi economy, contributing over 90% of
government revenues and more than 95% of exports.

Iraq elected a new government, and in September 2014 Haider Al-Abadi took over
as prime minister. Mr. Abadi is viewed as more inclusive and secular in his
approach than his predecessor, which could help ease ethnic tensions. In
addition, Mr. Abadi has planned significant reforms including cuts in the size
of government.

After a contraction of 2.2% in 2014 and an estimated 0.3% growth in 2015, real
GDP growth is expected to rise to an average of 5.7% from 2016-2018, largely as
a result of the expansion of oil production. We think that Iraq's oil
production will reach about 5 million barrels per day (b/d) by 2018 (with
exports of about 4.5 million b/d), compared with around 3.1 million b/d in
2014. We expect domestic demand will remain weak for at least two years owing
to the war against ISIS and general societal uncertainty.

Military and humanitarian expenditure related to the ISIS war and the decline
of oil prices have hurt public finances. We project the general government
fiscal deficit will reach 18% of GDP in 2015 and 12% of GDP in 2016 from a
deficit of 5.5% of GDP in 2014. The widening deficit is planned to be partially
financed by up to US$6 billion in external borrowing, and by domestic issuance
taken up by state-owned banks. We note that the Iraqi government has recently
been able to get international financial support and access to funding from
multilateral institutions. For example, the IMF recently approved a "Rapid
Financing Instrument" of about US$1.24 billion.

We project that general government debt will average 65% of GDP in 2015-2018,
up from about 39% of GDP in 2014. Iraq's debt load previously benefited from an
80% haircut that the government negotiated with its Paris Club creditors in
2003-2004.

Iraq's current account has typically run a surplus owing to Iraq's large oil
exports. However, we expect the current account balance to fall into deficit in
2015 because of the sharp drop in oil prices. We forecast Iraq's current
account deficit to average 3% of GDP in 2015-2018, compared with an average
surplus of 10% of GDP in 2011-2014. We forecast narrow net external debt at
about 9% of current account receipts (CARs) during 2015-2018, and we estimate
average gross external financing needs as a percentage of CARs and usable
reserves at about 76%.

Inflation currently remains low, with consumer price inflation in the low
single digits (approximately 2.2% in 2014). We expect that the Central Bank of
Iraq (CBI) will maintain the dinar's peg to the U.S. dollar, albeit with minor
fluctuations. While this has helped control inflation, the peg limits the CBI's
monetary flexibility.


OUTLOOK

The stable outlook reflects our expectation that fiscal and external deficits
will not worsen beyond our forecasts and that the war with ISIS will be
contained. It also incorporates our forecast of a return to strong growth from
2016 onward owing to the projected increases in oil production and oil exports.
We could lower the ratings if these assumptions do not hold.

On the other hand, we could raise the ratings if Iraq's security situation
improves significantly and, with it, Iraq's public finances.


KEY STATISTICS

RATINGS SCORE SNAPSHOT

RELATED CRITERIA AND RESEARCH

Related Criteria
-- Criteria - Governments - Sovereigns: Sovereign Rating Methodology -
December 23, 2014
-- General Criteria: Methodology For Linking Short-Term And Long-Term
Ratings For Corporate, Insurance, And Sovereign Issuers - May 07, 2013
-- General Criteria: Methodology: Criteria For Determining Transfer And
Convertibility Assessments - May 18, 2009

Related Research
-- Default, Transition, and Recovery: 2014 Annual Sovereign Default Study
AndRating Transitions, May 18, 2015

In accordance with our relevant policies and procedures, the Rating Committee
was composed of analysts that are qualified to vote in the committee, with
sufficient experience to convey the appropriate level of knowledge and
understanding of the methodology applicable (see 'Related Criteria And
Research'). At the onset of the committee, the chair confirmed that the
information provided to the Rating Committee by the primary analyst had been
distributed in a timely manner and was sufficient for Committee members to make
an informed decision.

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and critical issues
in accordance with the relevant criteria. Qualitative and quantitative risk
factors were considered and discussed, looking at track-record and forecasts.

The chair ensured every voting member was given the opportunity to articulate
his/her opinion. The chair or designee reviewed the draft report to ensure
consistency with the Committee decision. The views and the decision of the
rating committee are summarized in the above rationale and outlook. The
weighting of all rating factors is described in the methodology used in this
rating action (see 'Related Criteria and Research').

RATINGS LIST

Republic of Iraq
Sovereign credit rating
Foreign and Local Currency B-/Stable/B

Transfer & Convertibility Assessment B-

 
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GMT 7:25 2015 Friday, September 4th: Last Updated

 

 New York: agency Standard & Poor's announced Thursday that it had classified sovereign debt of Iraq and awarded him the degree of "bi" due to the conflict with al Daash.

The credit rating agency said in a statement that "Iraq faces the risk of once again on the institutions and the level of security," pointing out that these risks are "the highest among all sovereign countries being evaluated, especially because of its war with the organization of the Islamic state."

The agency also hinted to the difficulties in the establishment of permanent institutions in clashes divisions between Sunni and Shiite Arabs and Kurds. And also it noted "the budget and external pressures resulting therefrom because of lower oil prices in the second half of last year."

Oil prices fell by more than half since June 2014, particularly due to the large production of the Organization of Petroleum Exporting Countries (OPEC). But she pointed out that "Iraq has huge reserves and has significant oil exports", thereby reducing the concerns in this area.

So accompanying the Agency classified the prospect of stable growth, saying that the country will remain stable in the medium term due to the significant rise in oil production, which would reduce budget pressures.

The agency Fitch Ratings issued early August for the first time an assessment of Iraq and gave him the same class (bi). The third major agency Moody's has not yet classified as the religion of the country.

Iraq has been conflict and violence since the US-led invasion in 2003 that toppled Saddam Hussein's regime. It also faces a dispute with jihadists Daash organization since June 2014
.


Standard & Poor rates Iraq for first time

By AFP | 4 Sep, 2015, 03.15PM IST
 
.jpgStandard & Poor's issued war-torn Iraq a credit rating for the first time, with the country's conflict with Islamic State militants and low oil prices giving it a junk score.
 
NEW YORK: American financial service company Standard & Poor's issued war-torn Iraq a credit rating for the first time Thursday, with the country's conflict with Islamic State militants and low oil prices giving it a junk score. 

Iraq has been plagued by war and violence since the 2003 US invasion that toppled Saddam Hussein. Currently violent jihadists have taken over large parts of the country, something Standard & Poor's took into account when it handed out its B- rating. 

The country "Iraq faces security and institutional risks that are among the highest of all rated sovereigns -- stemming primarily from its war with ISIS," the agency said in a press release using another acronym for IS. 

S&P said in the statement that the country faces sectarian division between Shiites, Sunnis and Kurds and has "significant fiscal and external pressures." 

Those pressures stem partly from a global decline in oil prices, which have lost more than half their value since last year due to a glut of oil on the market. 

S&P qualified its warnings by noting that Iraq "benefits from massive oil reserves and high oil exports." 

Rating agency Fitch also issued its first credit rating to Iraq last month, another B-. 

Fitch noted the country's lack of control of three provinces and tense relations with the Kurdish regional government

The B- is a non-investment grade, or a speculative rating, which means many investment funds are not allow allowed to purchase such "junk" bonds. 

The B- rating is an indication the bonds may only have a small assurance of interest and principal payments over a long time, and is just one step above rating levels warning that a country is vulnerable to default on its bonds.
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Once again, there are factors that could have been put in to play to help get a higher rating, but their govt is just too (I struggle to find the right adjective here) headstrong, to do what needs to be done. I wonder if they realize or even care what this rating does for them on the international stage. So frustrating to see them spin wheels for years on end, one step forward every 3-4 years is ridiculous. But at least its a rating, and it could be worse I suppose. 

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 The global credit rating agency downgrades sovereign Iraq because of "Daash"

 

 

Date of publication: 04.09.2015 | 10:49 GMT |

 

55e9711ac46188512f8b458a.JPG
and a global credit rating agency downgrades sovereign Iraq because of "Daash"
 

The credit rating agency "Standard & Poor's" has announced that it has on Thursday, September 3 / September classification of sovereign debt of Iraq and awarded him the degree of "B-" because of the conflict with the terrorist organization Islamic state.

The agency said in a statement that "Iraq faces the risk of once again on the level of security institutions," noting that these risks are "the highest among all sovereign countries being evaluated, especially because of its war with the organization of the Islamic state."

The Agency also alluded to "the budget and external pressures resulting therefrom because of lower oil prices in the second half of last year."

Oil prices have fallen by more than half since the month of June 2014, especially because of the large-scale production of the Organization of Petroleum Exporting Countries "OPEC".

However, "S & P" indicated that Iraq has huge reserves and has substantial oil exports, thereby reducing the concerns in this area, so attached to the agency classified the prospect of a stable, saying that the country's growth will remain steady in the medium term due to the significant rise in oil production, which will ease of budget pressures.

The agency "Fitch" credit rating issued early August / last August for the first time an assessment of Iraq and gave him the same degree "B-", the third global agency "Moody's" has not yet classified the religion of the country.

 

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Standard & Poor's credit classified Iraq for the first time   

Friday 20/11/1436 e - corresponding to 04/09/2015 AD (updated) 14:32 pm (Mecca), 11:32 (GMT)    

Standard & Poor's said it ranked first sovereign debt of Iraq and awarded him the degree of "B minus", and attributed the granting of this low-grade credit to the gravity of the threats to the country, most notably the circuit between Iraqi forces and war organization of the Islamic state.

American foundation said in a statement that "Iraq faces security and institutional risk", pointing out that these risks are "the highest among all the countries that are its sovereign debt evaluation."

Standard & Poor's reported that there are difficulties in establishing permanent institutions in Iraq because of the existing divisions between the constituent communities of the country, and between risk also pressure on the budget due to the large drop in oil prices globally, which constitutes a significant risk to investors.

Stable look

the other hand, the institution pointed out that Iraq has huge reserves and has significant oil exports, which prompted Standard & Poor's to attach a credit rating outlook stable outlook, pointing out that the economic growth of the country will remain stable in the medium term due to the surge in crude production, which It will ease the pressure on the budget.

And Iraq is expected to grow by 5% in the next three years, according to Standard & Poor's estimates, that the economy will grow this year by 0.3%, the Foundation also expects oil production of the country in the past year increases of 3.1 million barrels per day to five million a year 2018.

The Fitch credit rating awarded Iraq early August / August last for the first time assigned a credit and gave him the same degree awarded by Standard & Poor's, while not issued by Moody's reducing time any classification, and are the three largest institutions and rating agencies and credit in the world.

And comes Baghdad for the first credit ratings as it seeks to issue bonds international value of five billion dollars, it is the first since 2006, in order to rebalance the public finances of the country, which are found in a difficult situation as a result of declining oil revenues and rising government spending.

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Thanks Yota!

In my opinion, I believe that Abadi has gotten the Iraqi Gov on the right track. Yes they are still a backward people, but they need to start somewhere...and I believe this is that start. Maliki didn't have the vision of the Greater Iraq and cost those poor people as well as us...a huge delay! :twocents:

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There are those who see the cup is half full and there are those who see the cup is half empty. My cup runneth over.

When Standard & Poor's says the Iraq is stable, that is no small deal. When they say they could upgrade Iraq's rating with Isis is no longer in the picture I believe him.

As was said during the chat yesterday, we're seeing less and less articles about Isis. I would imagine with this report Isis is going to fade very quickly.

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Ok, screw the bonds. Iraq must have known they would get a marginal rating. What options do they have? More borrowing? Maybe, but the loans have to be repaid in a timply manner. But if they RV they are borrowing from their future. Try to collect on that loan; we've done that for generations!!

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There are those who see the cup is half full and there are those who see the cup is half empty. My cup runneth over.

When Standard & Poor's says the Iraq is stable, that is no small deal. When they say they could upgrade Iraq's rating with Isis is no longer in the picture I believe him.

As was said during the chat yesterday, we're seeing less and less articles about Isis. I would imagine with this report Isis is going to fade very quickly.

Dude, you said exactly what I was thinking! Rightious .

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10626.jpg?width=400&height=300&crop=auto

Money in one of the private banks

 

Author: AHF, HAA 
Editor: AHF, BS 2015/09/04 20:54Number of Views: 230 

 

 

 

Long-Presse / Baghdad

Classified agency Standard & Poor's US financial services and credit rating, on Friday, Iraqi Finance bond strength rank B- weak, as shown that this category because of the vulnerability of Iraq to the risk of security and institutional impressive on the strength of its economy, the possibility of recovery of the Iraqi economy, supported by oil precautions confirmed.

It said the US Agency for credit rating by the New York-based In a statement, I followed the (long-Presse), "The agency classified the Iraqi Finance bond strength rank B- any vulnerable to exposure Iraq to the risk of security and institutional, one of the factors affecting the strength of the economy in the country." .

The statement added that "the rating B- means underinvestment bonds of hard currency and the country's vulnerability to economic environment critical oscillatory circuit with the continuation of the war with al Daash accompanied by a sharp decline in oil prices, which pose risks to investors as a whole."

The agency indicated that "overall economic activity in Iraq, which received a stable outlook from rating agency Standard & Poor's US, is expected to see a rise by 0.3% this year before making the most of up to 5% over the next three years, supported by the oil reserves huge for the country. "

US agency said that "these bright economic outlook is based on developments in the oil production increases, which it is estimated that it will reach a rate of 5 million barrels per day during 2018, compared to rates of total output last year, amounting to 3.1 million barrels per day."

US financial institution and he pointed out that "Indicators rating for Iraq constrained by the country waged war against al Daash, as well as political institutions that live initial stages of its development, as well as sectarian divisions between Shiite, Sunni and Kurdish ethnic groups."

American Foundation noted that "This category comes in conjunction with the development of the country's plans for economic officials to receive expected to attend in the first bond sale since investors in 2006 at a time when the government is trying to balance and strengthen its financial resources."

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If they don't pull off some kind of RV by the end of October, then I really don't see anything happening until early 2017.  I wish it wasn't so, but at the rate and mentality that these people are going, they will stay in the dark ages. 

The only thing that may change this is their arrogance when they see every country around them moving forward. And they are being left in the camel dust.

 

S&P focuses on oil.  Iraq has many other resources that I am sure foreign companies would love to help them develop. 

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Thanks Yota...The 'B' rating is a fair start...considering the situation Iraqi's in...They'll just have to pay a little extra on a loan or two until their rating can be improved...With this rating only well grounded companies with proven track records will be able to invest into a 'B' market...Holding off some of the wolves by their own collars.This should also give a little more infests on the direction and substantial means behind Abadi's reforms...  

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Standard & Poor's sovereign debt classified for Iraq

 

 

         

5/9/2015 0:00 

 For the first time granted {-B} 

capitals - AFP 

said agency Standard & Poor's that it had Thursday classifies the sovereign debt of Iraq and awarded him the degree of «bi» because of the conflict with the state regulation Alasalamah.oukalt credit rating agency in a statement that «Iraq is facing renewed risks to and institutions security level », pointing out that this risk is« the highest among all sovereign countries being evaluated, especially because of its war with the organization of the Islamic state ». 

and hinted Agency to« the budget and external resulting pressure because of lower oil prices in the second half of last year » .otrajat oil prices by more than half since June 2014, particularly due to the large production of the Organization of Petroleum Exporting Countries (OPEC) .ala she pointed out that «Iraq has huge reserves and has significant oil exports», thereby reducing the concerns in this area.

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%D9%85%D8%B8%D9%87%D8%B1-%D9%85%D8%AD%D9


Government adviser: rating agency Standard & Poor's credit rating unfairly

Author: Publisheron:



 

September 5, 2015


In: economyViews: 57 views




BAGHDAD / Center Brief for the Iraqi Media Network (IMN) - counting the appearance of Mohammed Saleh Economic Adviser to the Prime Minister Haider al-Abadi credit rating awarded by the US agency, "S & P" for Iraq unfair, noting that Iraq was contemplating getting a much higher degree classification.


And announced that the credit rating agency "Standard & Poor's" first on Thursday for granting Iraq degree "B-" in the global rating on the sovereign debt due to the ongoing strike of security as a result of the battles against Daash terrorist gangs.


Said Saleh's (IMN) The "issued by the credit rating agency Standard & Poor's unfair, and it is something of militancy, even though the country's cash-strapped and the war on terrorism."


Saleh pointed out that "Iraq is for the first time gets a credit rating, and this category Iraq confirms able to fulfill its financial debts," adding that it was expected that Iraq gets a rating of B + "".


And held a government delegation including the ministers of finance and planning and government consultants during the month of June, a series of meetings in the Turkish capital with three international banks and the Bretton Rodez and Fitch credit rating as a prelude to issue bonds worth $ 5 billion.


From: Haider al-Tamimi, editor: Mushtaq Feeli


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Thanks Yota...The 'B' rating is a fair start...considering the situation Iraqi's in...They'll just have to pay a little extra on a loan or two until their rating can be improved...With this rating only well grounded companies with proven track records will be able to invest into a 'B' market...Holding off some of the wolves by their own collars.This should also give a little more infests on the direction and substantial means behind Abadi's reforms...

i totaly agree, to be honest irag just needs more time to get isis and all the reforms under control. I don't want to wait either just like the rest of us, but this is a very corrupt, war torn country, that all of us have invested in. It just dosent happen over night, or in irags case it dosent happen over 10 yrs or more. Edited by siberian_shaddow
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