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SocalDinar

Iraq plans to issue domestic bonds

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Thug is hands down the funniest person on this forum!  That's what we need, more humor to get the edge off these "tense" times!

 

Thanks Thug for keeping it entertaining!  :bravo:   Are you not entertained!!!!!!!!!!!!!!!!!!

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Here is another article

 

Central Bank plans to issue bonds in local currency for the first time since 2003
The central bank governor said that the first tranche of bonds is expected to be worth three billion Iraqi dinars

 

 

 

BAGHDAD / obelisk: Abdul Basit Turki said Governor of the Central Bank of Iraq on Tuesday that Iraq plans to issue bonds in local currency for the first time since the overthrow of Saddam Hussein, which would allow the country's new tool of monetary policy.
 Turki said on the sidelines of a conference in Geneva that the first tranche of bonds is expected to be worth three billion Iraqi dinars ($ 2.58 million).
He added that this will be the first time that the issuance of bonds for fiscal policy and not for the purpose of funding.
 Turki said he expected that the first version of the new bonds will give a good response has been followed by more versions and that the total size of the issue will depend on demand.
 The bonds will increase for five years and the central bank hopes to issue the first tranche before the end of the year, despite that the decision on this will be made with the participation of the Ministry of Finance.
 Said said that the bond interest is expected to be less than the benchmark interest rate of the Central Bank of 6 percent.
 He added that Iraq's inflation rate of 2 percent, describing it as a rare and very good.
 He said there were no plans to issue international bonds, although it may happen in the future if there are ambitious plans for the development of needed funding.

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I'm liking these articles myself, I think it's a good thing.

WM13

Thats what Im thinking too WM13. I am no economist but any action by the CBI that moves their banking system in step with the world can't be bad. It will be interesting to see what the demand is like domestically. Also wonder how long these take to mature to the full 6 %

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Sandstorm:  You may have it backwards.  With a bond the MOF gets dinar for a promise to pay interest and return the dinar at maturity.  I don't think the intent is to pay back with significantly more valuable dinar..

If this deal goes through it pokes a big hole in the rumor that the MOF has been buying up dinar with the auctions.. Why then would they need to borrow dinar IF they already had a pile of it?

I think this is less about borrowing dinar and more about increasing the faith in the currency. Not sure if this will work but hopeful it will help the market value as people buy into this so called safe investment domestically. What they have is a pile of USD's sitting at the Fed and thats whats scary.

Why ...

It's the same story told a different way on a different day

Please enlighten us? 

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Bonds don't count towards a country's outstanding money printed, it's less than 3 million dollars. This must be for some kind of private deal.

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one more..12/11/2013 20:59
Central Bank plans to issue bonds in local currency for the first time since 2003

The central bank governor said that the first tranche of bonds is expected to be worth three billion Iraqi dinars

6028.jpg?width=400&crop=auto

 

 

BAGHDAD / obelisk: Abdul Basit Turki Iraqi Central Bank Governor on Tuesday that Iraq plans to issue bonds in local currency for the first time since the overthrow of Saddam Hussein, which would allow the country's new tool of monetary policy. 
said Turki on the sidelines of a conference in Geneva that the first tranche of bonds is expected to be worth three billion Iraqi dinars (2.58 million dollars). 
, adding that this would be the first time that being a bond issue for fiscal policy and not for the purpose of funding. 
said Turki said he expected that the first version of the new bonds will give a good response has been followed by more versions and that the total volume of the issue will depend on demand. 
would increase for bonds for five years and hopes the central bank to issue the first tranche before the end of the year, despite that the decision on this will be made ​​with the participation of the Ministry of Finance. 
Said The bond interest is expected to be less than the interest rate the standard of the Central Bank and of 6 percent. 
added that the inflation rate in Iraq is 2 percent describing it as No. rare and very good. 
said there were no plans to issue international bonds even though it may happen in the future if there are ambitious plans for development need funding.

 

Edited by yota691
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The first domestic bond is coming out low as a test of demand then they will increase the volume once they feel the demand is there.. Turki informs that there will be many more bonds to be sold in the future. This shows it has been in the plans for quite some time and IMO the last step for the cbi to reduce the money supply, of what little is left. If you look back the last year and a half you notice MoF expanded the currency auctions to more banks (20 total) and now as of recently they have been slipping in double auction days.

they have been working hard at reducing the domestic IQD supply and have been successful. The bonds are the last mechanism for the CBI.

Everything seems to be lining up and looking great for a rv in the near future.

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The first domestic bond is coming out low as a test of demand then they will increase the volume once they feel the demand is there.. Turki informs that there will be many more bonds to be sold in the future. This shows it has been in the plans for quite some time and IMO the last step for the cbi to reduce the money supply, of what little is left. If you look back the last year and a half you notice MoF expanded the currency auctions to more banks (20 total) and now as of recently they have been slipping in double auction days.

they have been working hard at reducing the domestic IQD supply and have been successful. The bonds are the last mechanism for the CBI.

Everything seems to be lining up and looking great for a rv in the near future.

This seems to be the DEBATE now on DV. Keep'm and the lopsters ay there is NO reduction in physical dinar and they are just stabilising and circulating...I think they are reducing ---LOL --- 'cause it goes with my theory of why it has taken 10 years - they had to get rid of all that past hyperinflation...yet the books have trillions still in circulationnnnnnnn...LOL

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The first domestic bond is coming out low as a test of demand then they will increase the volume once they feel the demand is there.. Turki informs that there will be many more bonds to be sold in the future. This shows it has been in the plans for quite some time and IMO the last step for the cbi to reduce the money supply, of what little is left. If you look back the last year and a half you notice MoF expanded the currency auctions to more banks (20 total) and now as of recently they have been slipping in double auction days.

they have been working hard at reducing the domestic IQD supply and have been successful. The bonds are the last mechanism for the CBI.

Everything seems to be lining up and looking great for a rv in the near future.

The double auction days are not truly double auctions days but rather making up for a day before or after with no auction.  Still only 6 auctions per week but I do like your optimism.

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I think I should chime in here.

First the bonds will be sold in Iraq only to reduce the money supply creating a demand fo it, because they still need to use dinar in the market for some things. These bonds are like When the US sells them to come up with money to pay debt or interest on it's debts. They will not be sold outside of Iraq.

Secondly they said they will be using this as a monetary tool. Keep in mind for them to move into artical 8 of the IMF they can not be more than a 2% spread from the CBI rate to the street rate. selling these bonds will reduce the money supply raising the street value.

They said the will be selling about 3 billion dinars worth of these bonds to start & should they need to sell more than they will deside at that time how much the will do.

It all comes down to supply & demand

With inflation around 2% they will need to be carfull not to mess up & sell to much to fast or they could cause damaged to the economy.

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Iraq plans to issue bonds in local currency for the first time since the overthrow of Saddam

 


14.11.2013 | (Voice of Iraq) - comment.PNGAdd a comment - 

 

BAGHDAD / Aswat al-Iraq: Abdul Basit Turki Saeed Governor of Central Bank of Iraq, said that Iraq plans to issue bonds in local currency for the first time since the overthrow of Saddam Hussein's regime which would allow the country's new tool of monetary policy, according to the agency (Reuters) news agency. 
told Said Reuters On the sidelines of a conference in Geneva that the first tranche of bonds is expected to be worth three billion Iraqi dinars (2.58 million U.S. dollars) (Dollar = 1165.000 Iraqi dinars). 
, adding that this would be the first time that being a bond issue for fiscal policy and not for the purpose funding. 
Said he expected that the first version of the new bonds will give a good response has been followed by more versions and that the total volume of the issue will depend on demand. 
would increase for the bonds for five years and hopes the central bank to issue the first tranche before the end of the year, despite that the decision on this will be made ​​with the participation of the Ministry of Finance. 
Said The bond interest is expected to be less than the interest rate the standard of the Central Bank amounting to 6 percent. 
added that the inflation rate in Iraq is 2 percent describing it as No. rare and very good. 
said there were no plans to issue international bonds, despite that might happen in the future if there are ambitious plans for the development of needed funding. 
m e (x)

 


Read more: http://dinarvets.com/forums/index.php?/topic/165633-iraq-plans-to-issue-bonds-in-local-currency-for-the-first-time-since-the-overthrow-of-saddam/#ixzz2kcGCkoIb

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this article is very telling.

 

Yep...very very telling....:)

I see a timeline.

 

If what Turki said is true, rest assured, before this year end we will either see a monetary reform (RV/LOP) or nothing at all (perhaps just a gradual increase over the next 5 yrs).

 

If CBI were to sell their dinar dominated bond valued at 3 billion dinar less whatever discounts now;  upon maturity period ( 5yrs later), CBI would have to pay the bond holder 3 billion dinar. 

 

It makes no financial sense to sell a 3 billion dinar bond (currently worth 2.58 million dollar), and then do financial reform in 2014/2015 or 2016 (LOP or RV at a rate 1:1) and 5 yrs later, pays the bond holder 3 billion dinar which could be worth 3 billion dollar by then (after financial reform).

 

So something has to happen before they start selling the bond at the end of this year.

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Yep...very very telling.... :)

I see a timeline.

 

If what Turki said is true, rest assured, before this year end we will either see a monetary reform (RV/LOP) or nothing at all (perhaps just a gradual increase over the next 5 yrs).

 

If CBI were to sell their dinar dominated bond valued at 3 billion dinar less whatever discounts now;  upon maturity period ( 5yrs later), CBI would have to pay the bond holder 3 billion dinar. 

 

It makes no financial sense to sell a 3 billion dinar bond (currently worth 2.58 million dollar), and then do financial reform in 2014/2015 or 2016 (LOP or RV at a rate 1:1) and 5 yrs later, pays the bond holder 3 billion dinar which could be worth 3 billion dollar by then (after financial reform).

 

So something has to happen before they start selling the bond at the end of this year.

Soooo . . . having said all this, doesn't appear likely they would RV prior to the selling: or is this just part of the confusion and there's something else afoot ? If so,what might be in the works ? This investment has more layers than an Outback Awesome Blossom Deep Fried Onion !

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Yep...very very telling....:)

I see a timeline.

If what Turki said is true, rest assured, before this year end we will either see a monetary reform (RV/LOP) or nothing at all (perhaps just a gradual increase over the next 5 yrs).

If CBI were to sell their dinar dominated bond valued at 3 billion dinar less whatever discounts now; upon maturity period ( 5yrs later), CBI would have to pay the bond holder 3 billion dinar.

It makes no financial sense to sell a 3 billion dinar bond (currently worth 2.58 million dollar), and then do financial reform in 2014/2015 or 2016 (LOP or RV at a rate 1:1) and 5 yrs later, pays the bond holder 3 billion dinar which could be worth 3 billion dollar by then (after financial reform).

So something has to happen before they start selling the bond at the end of this year.

I feel ya. The article is misleading in some regards. The meeting was in Geneva which makes me think this bond will be international and if there is interest on the bond it also makes me believe it will be international..It makes more sense imo if they used the government conversion rate (1.16) which has been confirmed in a Bloomberg article concerning Iraq's budget for the pricing of the bond and the bond would help keep the New lower denoms inflation in check.

But hey I'm the wild optimistic guy who bashes the lopsters and disinformation, so maybe my opinion doesn't mean much.

*Do the math from the article and it comes out to 1.16

http://mobile.bloomberg.com/news/2012-10-04/iraq-to-approve-2013-budget-of-138-trillion-dinars-this-month.html

**Speculator: someone who makes conjectures without knowing the facts

**Observer: a person who follows events, esp. political ones, closely and comments publicly on them.

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Yep...very very telling.... :)

I see a timeline.

 

If what Turki said is true, rest assured, before this year end we will either see a monetary reform (RV/LOP) or nothing at all (perhaps just a gradual increase over the next 5 yrs).

 

If CBI were to sell their dinar dominated bond valued at 3 billion dinar less whatever discounts now;  upon maturity period ( 5yrs later), CBI would have to pay the bond holder 3 billion dinar. 

 

It makes no financial sense to sell a 3 billion dinar bond (currently worth 2.58 million dollar), and then do financial reform in 2014/2015 or 2016 (LOP or RV at a rate 1:1) and 5 yrs later, pays the bond holder 3 billion dinar which could be worth 3 billion dollar by then (after financial reform).

 

So something has to happen before they start selling the bond at the end of this year.

Zul, I have always liked your intelligent posts...

I see the logic in the case you make. It works. Before the bond is to be paid, or perhaps before it is ISSUED and the terms agreed upon, some kind of currency reform should happen. Yet this is a small bond amount...but if it is a precursor to more bonds, and it would have to be if they are launching this, if they are successful, then it does point to some change coming before they go big with bonds.

 

And IF the bond program is part of Iraq conforming to IMF standards in order to be admitted into Art.VIII, then this fits right in to currency reform. Why would they shape their currency operations after international guidelines if they didn't intend to go international? They could just keep using the dollar, stealing our dinar investment money, and selling oil for dollars.

 

I'll let somebody else to the math, but in general, if they float, it might go fast (unless a managed float) so the bond outcome would be more or less the same.

 

If they RD, then I guess it will be neutral - so that is the scary part - anybody correct me on this one... 

 

Zul, you seem excited you have a good logical argument for this ride ending this year...LOL...I feel ya dude!

 

All this is called "reading between the lines." I am DONE with the debates over M1 and currency in circulation and LOP (Even though I love ya' Keepm) - We must look deeper than that debate.

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Zul, I have always liked your intelligent posts...

I see the logic in the case you make. It works. Before the bond is to be paid, or perhaps before it is ISSUED and the terms agreed upon, some kind of currency reform should happen. Yet this is a small bond amount...but if it is a precursor to more bonds, and it would have to be if they are launching this, if they are successful, then it does point to some change coming before they go big with bonds.

 

And IF the bond program is part of Iraq conforming to IMF standards in order to be admitted into Art.VIII, then this fits right in to currency reform. Why would they shape their currency operations after international guidelines if they didn't intend to go international? They could just keep using the dollar, stealing our dinar investment money, and selling oil for dollars.

 

I'll let somebody else to the math, but in general, if they float, it might go fast (unless a managed float) so the bond outcome would be more or less the same.

 

If they RD, then I guess it will be neutral - so that is the scary part - anybody correct me on this one... 

 

Zul, you seem excited you have a good logical argument for this ride ending this year...LOL...I feel ya dude!

 

All this is called "reading between the lines." I am DONE with the debates over M1 and currency in circulation and LOP (Even though I love ya' Keepm) - We must look deeper than that debate.

 

TQ for the kind words :D 

 

".....Why would they shape their currency operations after international guidelines if they didn't intend to go international?..."  :twothumbs: 

 

That is exactly what we are waiting for and what i'm excited about. lol!

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What I picked up on was that the bond would pay less interest than the current 6% payed out by the CBI. I'm not an expert with bonds but would this new bond offering more closely resemble a guaranteed interest bond like the US treasury pays? 1-2%? But of course our USD is worth more at the moment. So maybe there is some change in Iraqs monetary policy soon....

Thx Zul for the comments

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