Iraqi Bonds Struggle to Attract Investors

[SocalDinar]

Iraqi Bonds Struggle to Attract Investors

Arif Sharif and Lyubov Pronina | 07-09-2015, 07:56 AM | Iraq |

 

Conflict and low oil prices may drive down prices

Iraq’s effort to enlist bond investors in its fight against the self-proclaimed Islamic State and a collapse in the price of crude won’t come cheap. The Gulf nation’s first trial in the Eurobond market in almost a decade means it may have to pay “double-digit” interest to lure investors, says Morten Bugge, who helps manage about $2.5 billion of emerging-market debt at Kolding, Denmark-based Global Evolution.

Iraq announced a $6 billion bond programme on 18 August and may hold sales meetings with international investors as soon as this month, people familiar with the matter say. “It’s an oil exporter with ISIS in their backyard which weighs negatively on the bond sale,” Bugge, Global Evolution’s chief investment officer, says.

Iraq has been struggling to contain the expansion of the Islamic State’s foothold a year after the radical Sunni group took the nation’s biggest northern city, Mosul, and captured Ramadi, the capital of Anbar province, three months ago. The government is borrowing to close a budget shortfall as

“I am sure Iraq would wish for better timing”

the fight against terrorism and oil’s decline by around 50 per cent in the past year sap government finances.

Compounding risks for investors is a selloff in commodity-exporting  nations following mid-August’s yuan devaluation, while the Federal Reserve prepares to raise interest rates from near zero, Bugge says. Middle East and North African countries are issuing bonds this year at the slowest pace since 2011, according to data compiled by Bloomberg. “I am sure Iraq would wish for better timing,” Bugge says.

The yield on Iraq’s only international bond jumped to a new high for the year on 20 August, climbing 19 basis points to 8.73 per cent. The country had to seek $1.24 billion of emergency financing from the International Monetary Fund in July after oil prices slumped to their lowest in six years. Crude contributes about 40 per cent of economic output. “Iraq’s rating is very good in the current circumstances,” Majid Al-Souri, a board member of the Central Bank of Iraq said on 19 August. “It has huge fortunes of oil and gas and it can’t go bankrupt,” which will reassure investors, he said.

Fitch Ratings expects the country’s fiscal deficit to top 10 per cent of gross domestic product for 2015 because of lower crude prices, higher military spending and costs associated with the civil unrest.

Islamic State’s presence has put political risk in Iraq at the highest among any sovereigns it rates, Fitch said in August after it assigned the country’s bonds a speculative grade of B-. The assessment is on par with Cyprus and Jamaica and two levels above Greece and Ukraine.

The country’s foreign-currency reserves may drop to about $45 billion by the end of 2016, according to estimates by Exotix Partners. “Iraq is probably the most oil-dependent country in the world, so falling oil prices, really, really hurt this country,” Jakob Christensen, a London-based director at Exotix, says. Reserves “could drop significantly over the next two years if oil prices stay low and they don’t adjust,” he says. 

- See more at: http://www.businessweekme.com/Bloomberg/newsmid/190/newsid/1067/Iraqi-Bonds-Just-Arent-That-Attractive#sthash.63lLGmnd.dpuf

Iraqi Bonds Struggle to Attract Investors

Arif Sharif and Lyubov Pronina | 07-09-2015, 07:56 AM | Iraq |

 

Edited September 7, 2015 by SocalDinar

[Officiallytook]

Think this should be Bold and Red but I'm on mobile device not that technically inclined...but hey Lmfao

The Gulf nation’s first trial in the Eurobond market in almost a decade means it may have to pay “double-digit” interest to lure investors, says Morten Bugge

Think this should be Bold and Red but I'm on mobile device not that technically inclined...but hey Lmfao

The Gulf nation’s first trial in the Eurobond market in almost a decade means it may have to pay “double-digit” interest to lure investors, says Morten Bugge

[newbieDA]

why lie, they are unattractive, even the currency at .00086, wtf is that?

 

they need to do something! bunch of asswipes sitting on a land full of resources worth trillions along with magor possibilities within the current global economy, but no

 

what a waste, change it or except it

 

Think this should be Bold and Red but I'm on mobile device not that technically inclined...but hey Lmfao


The Gulf nation’s first trial in the Eurobond market in almost a decade means it may have to pay “double-digit” interest to lure investors, says Morten Bugge
Think this should be Bold and Red but I'm on mobile device not that technically inclined...but hey Lmfao


The Gulf nation’s first trial in the Eurobond market in almost a decade means it may have to pay “double-digit” interest to lure investors, says Morten Bugge

 

they simply can not, no way at that rate (dinar)

Edited September 7, 2015 by newbieDA

[blueskyline]

Maybe . Just maybe . Everything is being prepared right out in the open . And there is some sort of ,or several events that will be the catalyst for the growth we are all seeking .They had to have known for quite sometime their present condition would not gain a high credit rating or investors .

[newbieDA]

Maybe . Just maybe . Everything is being prepared right out in the open . And there is some sort of ,or several events that will be the catalyst for the growth we are all seeking .They had to have known for quite sometime their present condition would not gain a high credit rating or investors .

 

look this article says http://www.ibloomberg.net/s-outlook-stable-79/

 

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

[pocono]

Iraq originally attempted this bond sale back in 2013...At that time the existing bonds from 2006 climbed 19 basis pts.to 7.8% and Iraq scrapped the plan. This article says the 2006 bonds are at 8.73% which is worse.

It shouldn't come as a surprise should they elect not to go through with the bond offering rather than pay double digits.

[newbieDA]

pocono, it was a stupid idea if they thought it was going to save them, most everyone knew it was setup for the future, at least I did.

 

They still are going to be blacklisted as of today, the need to get it together and they are in my book, security and corruption, which is in motion.

 

Everything else is just lining up the dominoes to fall in the right way, cause they are screwed if they dont stay par on the international or global level. That AML law has to be read tomorrow or they are screwed JMHO

 

If they are not par, they are lame and just wasting everyone's time if Investment Law, National Guard Law, and AML are not further within Parliament this week.

Edited September 7, 2015 by newbieDA

[Officiallytook]

You gotta believe

[newbieDA]

You gotta believe

 

I do believe, I am with you, they have a chance

[Officiallytook]

10-4 newbieDA

[drj]

why lie, they are unattractive, even the currency at .00086, wtf is that?

 

they need to do something! bunch of asswipes sitting on a land full of resources worth trillions along with magor possibilities within the current global economy, but no

 

what a waste, change it or except it

 

 

they simply can not, no way at that rate (dinar)

 

Tlars Brother insisted that there would be no bond sales until a rate change....ah...hmm...I guess, so much for that one, didn't happen.  

 

I have to agree with you that they cannot wait on their current rate and need to change but it doesn't look like it. 

[Big_J]

POOP OR GET OFF THE POT TIME!

[10 YEARS LATER]

Thats right ! POOP-get off the POT-and then DOOOO ITTTTT !

[TrinityeXchange]

someone help me understand how the exchange rate of the dinar is related to them borrowing using euro-bonds or usd-bonds?  

[yota691]

Tlars Brother insisted that there would be no bond sales until a rate change....ah...hmm...I guess, so much for that one, didn't happen.  

 

 

Iraq begins Thursday to promote an international bond issue six billion dollars

History of edits:: 2015/9/8 13:53 • 30 visits readable

[Follow-where] 

banking sources said that the Iraqi government will start promotion campaign next Thursday for the first international bond issue in nine years as it seeks to finance a budget deficit because of falling oil prices and the war against Sunni Islamist al Daash.

Sources familiar with the matter told Reuters that "Baghdad want to combine up to six billion dollars in a series of versions of the bills dollar, but the first version is expected to be much smaller." 

Said Mrtbo versions that "the banks Citigroup, Deutsche Bank, JP Morgan arranging version and will begin meetings with investors in the United Kingdom and the United States. 

"In spite of the political risk in Iraq is expected to contribute to Baghdad put the largest oil producer in the Organization of Petroleum Exporting Countries as the second [OPEC] to reassure buyers on entitlements and the large oil fields in the south of the country not exposed to fight directly in addition to that Iraq adopt an ambitious plan will continue for several years to increase its production of oil. 

It is expected that Baghdad pay a high price for borrowing, where the yield 10.37 percent on the Iraqi dollar bonds due in 2028. 

Prior to the sale this month, Iraq won the first his sovereign credit rating gave him Bretton where Standard & Poor's and Fitch rating B- a rating below six degrees of investment grade. 

He was Finance Minister Hoshyar Zebari said in 22 of the last June that Iraq has begun promoting overseas bonds Tune six billion dollars. 

The government's much-needed liquidity as it expects a deficit of about $ 25 billion this year in the size of the budget of about 100 billion Dolar.anthy

Read more: http://dinarvets.com/forums/index.php?/topic/207916-banking-sources-government-begins-on-thursday-to-promote-an-international-bond-issue/#ixzz3l9CZGIjN

[Officiallytook]

"the banks Citigroup, Deutsche Bank, JP Morgan arranging version and will begin meetings with investors in the United Kingdom and the United States."

I believe it's been done...this whole thing...just a matter of timing laws security etc

[newbieDA]

someone help me understand how the exchange rate of the dinar is related to them borrowing using euro-bonds or usd-bonds?  

 

absolutely nothing, I agree, only thing in common is the lack of confidence due to them not passing the laws and/or measures

 

by the way Trinity, thank you, love your comments, I look for them

Edited September 8, 2015 by newbieDA

[drj]

 

Iraq begins Thursday to promote an international bond issue six billion dollars

History of edits:: 2015/9/8 13:53 • 30 visits readable

[Follow-where] 

banking sources said that the Iraqi government will start promotion campaign next Thursday for the first international bond issue in nine years as it seeks to finance a budget deficit because of falling oil prices and the war against Sunni Islamist al Daash.

Sources familiar with the matter told Reuters that "Baghdad want to combine up to six billion dollars in a series of versions of the bills dollar, but the first version is expected to be much smaller." 

Said Mrtbo versions that "the banks Citigroup, Deutsche Bank, JP Morgan arranging version and will begin meetings with investors in the United Kingdom and the United States. 

"In spite of the political risk in Iraq is expected to contribute to Baghdad put the largest oil producer in the Organization of Petroleum Exporting Countries as the second [OPEC] to reassure buyers on entitlements and the large oil fields in the south of the country not exposed to fight directly in addition to that Iraq adopt an ambitious plan will continue for several years to increase its production of oil. 

It is expected that Baghdad pay a high price for borrowing, where the yield 10.37 percent on the Iraqi dollar bonds due in 2028. 

Prior to the sale this month, Iraq won the first his sovereign credit rating gave him Bretton where Standard & Poor's and Fitch rating B- a rating below six degrees of investment grade. 

He was Finance Minister Hoshyar Zebari said in 22 of the last June that Iraq has begun promoting overseas bonds Tune six billion dollars. 

The government's much-needed liquidity as it expects a deficit of about $ 25 billion this year in the size of the budget of about 100 billion Dolar.anthy

Read more: http://dinarvets.com/forums/index.php?/topic/207916-banking-sources-government-begins-on-thursday-to-promote-an-international-bond-issue/#ixzz3l9CZGIjN

 

 

 

From this article, it looks like Tlars Brother has until Thursday to see if his prediction is correct.  

 

 

absolutely nothing, I agree, only thing in common is the lack of confidence due to them not passing the laws and/or measures

 

by the way Trinity, thank you, love your comments, I look for them

 

 

someone help me understand how the exchange rate of the dinar is related to them borrowing using euro-bonds or usd-bonds?  

 

I agree with Trinity and Newbie, there is nothing that correlates the exchange rate to the sale of bonds.   I also second Newbie, thanks for your insights Trinity.  I enjoy reading your posts.  

[SocalDinar]

Iraq to Kick off Bond Roadshow as Oil Drop Hurts Income

Iraq is planning meetings with investors in Europe and the U.S. as the rout in crude prices pushes the nation toward tapping international bond markets for the first time in almost a decade.

The Gulf nation, which depends on oil for the bulk of its export revenue, mandated Citigroup Inc., Deutsche Bank AG, and JPMorgan Chase & Co. to organize the meetings beginning on Sept. 10, according to a person familiar with the matter. A dollar bond offering of at least $500 million may follow, said the person, who is not authorized to speak publicly and asked not to be identified.

The government, which announced a $6 billion bond program last month, is borrowing to close a budget shortfall as the fight against the Islamic State and oil’s 52 percent decline in the past year sap state finances. Yields on Iraq’s bonds due 2028 have soared over the period, and Tuesday reached 9.34 percent -- the highest since 2009. 

 

“The political risk in Iraq would still be very high for most investors to accept,” Edward Bell, an analyst at Dubai-based bank Emirates NBD PJSC, said by e-mail. Security risks and doubts about “policy continuity and transparency would be a big concern for investors,” he said.

The securities will be rated six steps below investment grade by Standard & Poor’s, or B-, the ratings company said Tuesday. The country’s outlook is challenging because of its war with the Islamic State, fledgling political institutions, and ethnic divisions, S&P said in a report Sept. 3.

An increase in oil production, which accounts for 90 percent of government revenues and 95 percent of exports, will help boost Iraq’s economic growth to an average 5.7 percent between 2016 and 2018 from an estimated 0.3 percent this year, said S&P.

 

http://www.bloomberg.com/news/articles/2015-09-08/iraq-to-kick-off-bond-investor-meetings-as-oil-drop-hurts-income

Edited September 8, 2015 by SocalDinar