Outlook upgrade could help push Iraq's economic evolution to its next step

[The Englishman]

Outlook upgrade could help push Iraq's economic evolution to its next step

Dawn Kissi | @dawnkissi

Sunday, 2 Apr 2017 | 1:00 PM ETCNBC.com

 

Phototreat | iStock/360 | Getty Images

Baghdad

War-torn Iraq recently got an unexpected boost on its way to becoming an investment hot spot, which may take its next step sooner than conventional wisdom suggests.

Even as military forces wage a fierce offensive against ISIS, global ratings agency Fitch upgraded last month Iraq's outlook to stable, based largely on the country's improving public finances.

To be sure, Iraq's B+ credit rating is still deeply entrenched in speculative, or junk territory. The low rating reflects what Fitch analysts called political risk and instability associated with the conflict-ridden country that's "among the highest faced by any sovereign rated by Fitch."

 

Yet as a marker for big institutional buyers like hedge funds and sovereign wealth arms, Fitch's vote of confidence could mark the start of a broader shift among investors about Iraq's long-term potential. The upgrade could be pivotal for a country still considered besieged, but considered by a handful of savvy market watchers to be a potential diamond in the rough.

"Some analysts say that investors believe that with solid oil reserves and other sectors to build upon, Iraq could have serious growth potential," said Stephen Simonis Sr., chief currency consultant at online currency broker FXDD Global.

"Clearly this can be looked at from either side, as the willing investor will point out the huge risk/reward possibility as the upside is very enticing," Simonis told CNBC. "The doubting investor will say the region remains too unstable and the situation remains far too volatile."

Azad Lashkari | Reuters

Kurdish Peshmerga forces advance in the east of Mosul to attack Islamic State militants, October 17, 2016.

Iraq remains a country to approach with caution, analysts say, roiled by an ISIS insurgency and civil strife. Yet Fitch's revised outlook could be a green light for buyers of Iraq's assets, especially at a time when smaller institutional and private investors are seeking long-term opportunities.

In fact, Iraq's stock market has already been running with at full steam since at least last year, with investors discounting an end to a bloody conflict that's lasted since the 2003 invasion. Some are looking ahead to the reallocation of military spending and the potential boost to infrastructure spending and economic revival.

While foreigners have been mostly absent from the equity market for the month of March, some are already looking for signs that the Fitch decision could reverse this dynamic.

"Overall, foreign interest in Iraq continues to go through a transformational change in the eyes of global institutional investors," Ahmed Tabaqchali, chief investment officer of Asia Frontier Capitals Iraq Fund, told CNBC.

In fact, Iraq's sovereign risk premium has narrowed in an environment of rising yields, just after the country tapped capital markets with a second $1 billion bond offering.

"It seems logical to conclude that this implies favorable interest in Iraq and that it would likely be followed by foreign direct investment and eventually by equity inflows," Tabaqchali said.

Although Iraq joined other OPEC members in a production cut — a challenge for the country's oil-reliant economy — some analysts believe the oil sector is managing to stay afloat in an environment of lower prices.

— Reuters contributed to this article.

[Laid Back]

As soon we see the official announcement of the liberation of Mosul, Iraq economic outlook will improve and investment will flood the country.

 

Go liberation of Mosul 

Go credit rating

Go investment 

[tigergorzow]

17 minutes ago, Laid Back said:

As soon we see the official announcement of the liberation of Mosul, Iraq economic outlook will improve and investment will flood the country.

 

Go liberation of Mosul 

Go credit rating

Go investment 

LB,  You are absolutely 100% correct.

 

GO RV / RI

 

GO Liberation Of Mosul

[nannab]

Thank you Englishman.

[ChuckFinley]

Everyone is watching Iraq and watching it closely. 

[10 YEARS LATER]

I'm ALL in for the - - -  economic evolution to its next step      

[Officiallytook]

The  I've been 👀 for

[NoviceInvestor]

15 minutes ago, Officiallytook said:

The  I've been 👀 for

In the "coming weeks" i pray ...

[Synopsis]

10 hours ago, Laid Back said:

As soon we see the official announcement of the liberation of Mosul, Iraq economic outlook will improve and investment will flood the country.

 

Go liberation of Mosul 

Go credit rating

Go investment 

 

9 hours ago, tigergorzow said:

LB,  You are absolutely 100% correct.

 

GO RV / RI

 

GO Liberation Of Mosul

 

I agree with you, Laid Back and TigerGorZow!

 

An article similar to this came out when Fitch first announced the B+ rating. Once "political risk and instability associated with the conflict-ridden country" have been reduced with ISIS territories retaken in Iraq, another Major Credit Agency could announce a reasonably stable rating. If indeed Nuri al-Maliki will face indictment and prosecution for the 2014 ISIS insurgency facilitation, this could lend to a significant reduction in political risk and instability. With a few needed laws passed that appear to be in the works and fully seating the rest of the GOI, the Major Credit Rating could hit a point where the subsequent flood of foreign investment into Iraq will be nominally incalculable. I can't imagine the IQD being devalued during and after the investment tsunami hits. Too many problems down the road due to trade and subsequent inequities that could cause a greater economic problem and lead to more world wide economic issues.

 

Yep, lookin' forward to what happens when Mosul is announced as fully taken from ISIS. This could be a trigger for a whole bunch of other things we have been looking for. The implementation of the National Reconciliation after the Mosul is free announcement is made is very, very good news in my opinion and suggests a major social move to stability necessary for favorable credit ratings.

 

Go Moola Nova!

Edited May 7, 2017 by Synopsis

[ChuckFinley]

Thanks Englishman, Synopsis and the rest of the gang.  

[Wiljor]

Thanks Englishman for this great article 

Good afternoon DV, trusting your Sunday is going well. 

"the willing investor will point out the huge risk/reward possibility as the upside is very enticing,"

This line caught my attention and yes I agree Chuck, everyone is watching Iraq right now and the war against IS and corruption is well underway and in its final stages. Their is no shortage of cash in the global market place and investors are looking at Iraq very closely.

I also concur with our good friend Laid Back and the liberation of Mosul will bring about major changes in Iraq's outlook. Maliki's noose seems to be slowly tightening and won't be long either before  he will be a thing of the past and Abadi's government can get down to real business.

 

The moment Iraq's credit rating moves north from where it's now, you can bet global investors will pounce all over it and as LB stated, the flood gates will be open and its game on. 

Although frustrating as it may feel, imo it looks like the fruit is starting to look ripe for Pickens and iraq is on the for front of peace and economic prosperity 

 is all around amigos, ya just have to read between the lines ............ emeralds for you all 

Edited May 7, 2017 by Wiljor

[SnowGlobe7]

People still use outlook?

[ChuckFinley]

20 minutes ago, Wiljor said:

Thanks Englishman for this great article 

Good afternoon DV, trusting your Sunday is going well. 

"the willing investor will point out the huge risk/reward possibility as the upside is very enticing,"

This line caught my attention and yes I agree Chuck, everyone is watching Iraq right now and the war against IS and corruption is well underway and in its final stages. Their is no shortage of cash in the global market place and investors are looking at Iraq very closely.

I also concur with our good friend Laid Back and the liberation of Mosul will bring about major changes in Iraq's outlook. Maliki's noose seems to be slowly tightening and won't be long either before  he will be a thing of the past and Abadi's government can get down to real business.

 

The moment Iraq's credit rating moves north from where it's now, you can bet global investors will pounce all over it and as LB stated, the flood gates will be open and its game on. 

Although frustrating as it may feel, imo it looks like the fruit is starting to look ripe for Pickens and iraq is on the for front of peace and economic prosperity 

 is all around amigos, ya just have to read between the lines ............ emeralds for you all 

Wiljor trust you are doing well.  Things are starting to solidify and when that rating comes out there will an influx of investment into Iraq.  Currency better be available.   

[paperboy]

snowglobe - good question.   I've never used it, but I too thought it was sliding into oblivion.    

[SnowGlobe7]

24 minutes ago, paperboy said:

snowglobe - good question.   I've never used it, but I too thought it was sliding into oblivion.    

 

Good seeing you my dear friend!!!!!

[Laid Back]

11 hours ago, tigergorzow said:

LB,  You are absolutely 100% correct.

 

GO RV / RI

 

GO Liberation Of Mosul

Tiger

1 hour ago, Synopsis said:

 

 

I agree with you, Laid Back and TigerGorZow!

 

An article similar to this came out when Fitch first announced the B+ rating. Once "political risk and instability associated with the conflict-ridden country" have been reduced with ISIS territories retaken in Iraq, another Major Credit Agency could announce a reasonably stable rating. If indeed Nuri al-Maliki will face indictment and prosecution for the 2014 ISIS insurgency facilitation, this could lend to a significant reduction in political risk and instability. With a few needed laws passed that appear to be in the works and fully seating the rest of the GOI, the Major Credit Rating could hit a point where the subsequent flood of foreign investment into Iraq will be nominally incalculable. I can't imagine the IQD being devalued during and after the investment tsunami hits. Too many problems down the road due to trade and subsequent inequities that could cause a greater economic problem and lead to more world wide economic issues.

 

Yep, lookin' forward to what happens when Mosul is announced as fully taken from ISIS. This could be a trigger for a whole bunch of other things we have been looking for. The implementation of the National Reconciliation after the Mosul is free announcement is made is very, very good news in my opinion and suggests a major social move to stability necessary for favorable credit ratings.

 

Go Moola Nova!

Agree with you Synopsis 

Thanks for your input.

[Synopsis]

15 minutes ago, Laid Back said:

Tiger

Agree with you Synopsis 

Thanks for your input.

 

And your input as well, Laid Back! 

[paperboy]

Good seeing you, as well, snowglobe.    Especially when you're not throwing something at me!   

[SnowGlobe7]

2 minutes ago, paperboy said:

Good seeing you, as well, snowglobe.    Especially when you're not throwing something at me!   

 

(throws a paperclip at paperboy)

then runs for the hills

 

[ChuckFinley]

52 minutes ago, Synopsis said:

 

And your input as well, Laid Back! 

Just checking you folks out, I see we are all on the same sheet of music.  

[Synopsis]

16 minutes ago, ChuckFinley said:

Just checking you folks out, I see we are all on the same sheet of music.  

 

.......................same sheet of music 'cause soon we'll all be singing the same song!!!         

 

      

 

Go Moola Nova!

[Wiljor]

2 hours ago, ChuckFinley said:

Wiljor trust you are doing well.  Things are starting to solidify and when that rating comes out there will an influx of investment into Iraq.  Currency better be available.   

 

All good down here Chuck, hotter then heck but hey the frozen margaritas take the edge off brother 

[jmartin1145]

Im just wondering when Laidback is going to get tired of saying the word GO. In all seriousness, I would like to have a beer with Laidback and Sandfly. Just think of it. Laidback says GO, Sandfly says THANKS, and I can say anything I want.