Agency: the escalation of tensions will affect the classification of countries in the Middle East

[Butifldrm]

Fitch maintains a credit rating "risk" to Iraq and warns of the closure of Hormuz it

 

EconomyFitchcredit ratingIraqi oil exportStrait of Hormuz

 2019/07/26 00:42:31

A- A A +

Shafak News / Fitch said that it has maintained Iraq's credit rating at (B-), a degree of risk, and a stable outlook.

Fitch warned in a statement of the repercussions of the outbreak of hostile actions leading to the closure of the Strait of Hormuz, Iraq, because it lacks other routes of export of oil in the south.

Fitch estimated that the closure of the strait for a month could result in Iraq losing $ 6.5 billion in oil revenues, or nearly 3 percent of GDP.

The tension in the region, on the evening of July 19, after Iran announced the detention of a British tanker in the strait, "to break the regulations on traffic," hours after a court in Gibraltar, the extension of the detention of an Iranian oil tanker for 30 days.

According to data from the US Energy Information Administration and the International Energy Agency, 21 percent of global crude supplies (21 million barrels per day) pass through the Strait of Hormuz.

"The tightening of US sanctions against Iran is difficult for Iraq because it depends on Iranian electricity and gas imports as inputs to generate electricity," she said.

In 2018, the high export price of Iraqi oil 33 percent to budget surplus about 8 percent of GDP, after five years of deficit, according to the statement.

Iraq, OPEC's second largest crude producer, has an average production of 4.5 million bpd.

Government debt in Iraq has fallen to less than 50 percent of GDP in 2018, compared with 66 percent of GDP in 2016.

Foreign currency reserves excluding gold were $ 61 billion at the end of 2018, compared with $ 46 billion in 2017.

The external debt service of the Iraqi government ranges from $ 2.5 billion to $ 2.8 billion annually in the period 2019-2021.

Fitch said lower oil prices were triggering a further deterioration in fiscal and balance of payments conditions in Iraq between 2019-2021.

Iraq, an OPEC member, relies on oil revenues to finance up to 95 percent of state expenditure.

It expects Brent crude to hit $ 65 a barrel in 2019 and about $ 61 per barrel in 2020-2021.

https://www.shafaaq.com/ar/اقتصـاد/فيتش-تبقي-على-تصنيف-ائتماني-خطر-للعراق-وتحذر-من-غلق-هرمز-عليه/

[yota691]

Fitch maintains a credit rating "risk" to Iraq and warns of the closure of Hormuz it

 

 

 2019/07/26 01:42:31

 

Shafak News / Fitch said that it has maintained Iraq's credit rating at (B-), a degree of risk, and a stable outlook.

Fitch warned in a statement of the repercussions of the outbreak of hostile actions leading to the closure of the Strait of Hormuz, Iraq, because it lacks other routes of export of oil in the south.

Fitch estimated that the closure of the strait for a month could result in Iraq losing $ 6.5 billion in oil revenues, or nearly 3 percent of GDP.

The tension in the region, on the evening of July 19, after Iran announced the detention of a British tanker in the strait, "to break the regulations on traffic," hours after a court in Gibraltar, the extension of the detention of an Iranian oil tanker for 30 days.

According to data from the US Energy Information Administration and the International Energy Agency, 21 percent of global crude supplies (21 million barrels per day) pass through the Strait of Hormuz.

"The tightening of US sanctions against Iran is difficult for Iraq because it depends on Iranian electricity and gas imports as inputs to generate electricity," she said.

In 2018, the high export price of Iraqi oil 33 percent to budget surplus about 8 percent of GDP, after five years of deficit, according to the statement.

Iraq, OPEC's second largest crude producer, has an average production of 4.5 million bpd.

Government debt in Iraq has fallen to less than 50 percent of GDP in 2018, compared with 66 percent of GDP in 2016.

Foreign currency reserves excluding gold were $ 61 billion at the end of 2018, compared with $ 46 billion in 2017.

The external debt service of the Iraqi government ranges from $ 2.5 billion to $ 2.8 billion annually in the period 2019-2021.

Fitch said lower oil prices were triggering a further deterioration in fiscal and balance of payments conditions in Iraq between 2019-2021.

Iraq, an OPEC member, relies on oil revenues to finance up to 95 percent of state expenditure.

It expects Brent crude to hit $ 65 a barrel in 2019 and about $ 61 per barrel in 2020-2021.

[King Bean]

7 hours ago, Butifldrm said:

Fitch said that it has maintained Iraq's credit rating at (B-), a degree of risk, and a stable outlook.

 

Thanks Butifldrm. A good news day, sorta, for Iraq....coming on the heels of the IMF Article IV consultation report. They just need that kick in the pants to take action on the IQD value. Where's Chuck Norris when we need him??  

                                                                                                                                                

[10 YEARS LATER]

Didn’t realize Hormuz had an “ It “- whatever “ It “ is I hope “ It “ isn’t anything that burns, itches, scratches, blisters, peels or causes seepage from the nethers. 

You never know what you’ll catch in that part of the world. 

 

10YL+6&

[ChuckFinley]

10 minutes ago, 10 YEARS LATER said:

Didn’t realize Hormuz had an “ It “- whatever “ It “ is I hope “ It “ isn’t anything that burns, itches, scratches, blisters, peels or causes seepage from the nethers. 

You never know what you’ll catch in that part of the world. 

 

10YL+6&

like so and so.

[dinarham]

The Strait of Hormus is an integral part of the Silk Road . I believe we have two aircraft carriers parked there , along with their destroyers ,subs , enough to level the mountains of Iran , The closure of this waterway is highly unlikely and would have a big negative impact on all countries .  As far as Iraq having a B-  ,you have heard the saying , "No risk 'no reward ".  B- is not so bad ! 

[yota691]

Fitch: $ 5.6 billion Iraq's monthly losses in the event of closure of the Strait of Hormuz

 

Strait of Hormuz

energy Economy News Baghdad Fitch Ratings, in a report published on the losses that will be in Iraq, if the Strait of Hormuz close to its oil exports. The closure of the strait for a month could result in Iraq losing about $ 5 billion to $ 600 million in oil revenues, nearly three percent of its GDP, the agency said in its report. The report added that the repercussions of the outbreak of hostilities leading to the closure of the Strait of Hormuz on Iraq will be significant, as it lacks other routes of export of oil in the south.  The oil expert Hamzah al-Jawahiri ruled out the closure of the Strait of Hormuz during the current period by Iran as it would be the biggest victim, as he put it. "The closure of the Strait of Hormuz means that Iran will stop 400,000 barrels of its exports through it and will lose a lot, especially as most of its oil passing through this strait goes to countries that have rejected sanctions against Iran, such as China, India and Russia," he said.  He pointed out that China can buy all Iranian oil exports, and Iran will use this strait to export its oil and not in its interest to close it, but it is just a threat to some countries. He added that if Iran insists on closing the Strait of Hormuz, it will cause great problems for the Iraqi economy as it is supported by 92% of the oil revenues, which will be reflected negatively on it. Oil prices are expected to double as the Strait closes. Iraq can export 650,000 barrels through the Turkish pipeline, but it will still earn one-third of its revenues because it is mainly dependent on the southern oil pipeline. Views 41   Date Added 28/07/2019

[6ly410]

Hussain Qaragholi, Head of Corporate Banking Coverage for the Northern Gulf & Levant, ME Sovereign Wealth Funds at Deutsche Bank AG

 

 

1) Moody’s rates Iraq at Caa1. What type of reforms can the government implement to put decades of turmoil behind it?

Moody’s unsolicited rating of the Republic of Iraq doesn’t benefit from full access and data from the government. Both Standard & Poor’s and Fitch provide solicited ratings, and have a B-/B- Stable Outlook sovereign credit rating for the Republic. Iraq ranks higher in virtually every credit metric relative to the median of its B-rated sovereign peers, including in FX reserves of $62 billion; nominal GDP and GDP per capita of $230 billion and $5,800 respectively and relatively low debt to GDP of 52%. On stand-alone economic terms, Iraq punches well above its current credit rating. 

 

 

Where Iraq’s rating gets dragged down, according to the rating agencies, is mainly due to its over-dependence on commodity prices, geopolitics and lack of internal cohesiveness among other reasons.  While the Government of Iraq successfully implemented some reforms agreed under the IMF’s 3-year stand-by arrangement (SBA), there are a number of reforms that are still in draft legislation awaiting a vote by Iraq’s parliament.  These reforms range from diversifying the sources of government revenue (e.g. improved electricity tariff and customs collection) to fiscal consolidatio

 

It should be noted that since 2003, Iraq’s nascent parliamentary democracy has had 5 successful elections and peaceful transfers of power, and since 2015, Iraq’s armed forces successfully defended its territory by defeating both the challenge from ISIS as well as containing an independence bid from the Kurdistan Regional Government.  While facing these challenges, Iraq continued to increase oil production reaching an all-time record of 5 million barrels per day and becoming the 2^nd largest producer in OPEC after Saudi Arabia. 

2) Iraq issued its first independent bond back in 2017 at attractive yields. Do you expect other issuances in the recent future? Will yields be as attractive?

Deutsche Bank lead-managed both of Iraq’s debut sovereign bonds in 2017, the $1 billion Iraq 2.149% coupon 2022 USAID bond, and the  $1 billion Iraq 6.75% coupon 2023 bond.  The current 2019 budget law doesn’t include appropriations for a bond issuance, however there are a number of approved borrowings for infrastructure financing – mainly in the form of export credit agency (ECA) and development finance institutions (DFI) covered loans. 

In the loan markets, we are seeing the entry of additional international financial institutions and a significant tightening of spreads for Iraq risk.  On a recent trade, we saw Iraq credit spreads approach that of its single A-rated neighbors in the Arabian Gulf.

3) What are Iraq’s infrastructure needs following the long war? What is the cost to rebuild?

Iraq’s infrastructure is dilapidated due to the decades of wars and sanctions under the Saddam Hussein era. The change of regime and the lifting of sanctions in 2003 opened Iraq to the global markets and caused a significant increase in the imports of white goods by Iraq’s 40 million population and its burgeoning middle class, leading to a material increase in energy consumption that continues to require large investments.  

The Iraq-led and internationally-supported campaign against ISIS left large swaths of Iraqi territory in ruin, including its second largest city of Mosul with a population of nearly 2 million. Investments are required in other sectors including in water, transportation, education, health and housing.  The snap back of sanctions on Iran, is both a forcing mechanism and an opportunity for the Government of Iraq to increase investments in domestic gas production and the capturing of gas-flaring for power generation.

The World Bank and Government of Iraq estimate the initial cost of reconstruction for Iraq to be approximately $88 billion.  Of this amount around $77 billion was to be financed by the Government of Iraq; with $50 billion coming from oil and other revenues, and $27 billion through ECA/DFI loans and capital markets issuances. 

However, the cost to rebuild is likely to be higher if one were to include the approximately $160 billion in investments that Iraq had appropriated in its annual investment budgets from 2015 to 2019 but had not spent. 

And, if one were to add the costs of reconstructing the damage caused by ISIS, this figure would be substantially higher.

4) What is the best way to finance these needs in your opinion?

Iraq has a number of financing tools available at its disposal, ranging from traditional short term trade finance to bank loans and capital markets as well as donor grants and soft loans via bilateral and multilateral agencies.  

Given the gargantuan infrastructure financing requirements, I believe the Government of Iraq would be well advised to tap all of the pockets of liquidity and financing tools available to it.  Additionally, Iraq’s stakeholders pledged approximately $30 billion during the Iraq investment and reconstruction conference that was held in Kuwait in February 2018. 

Of this amount, approximately $23 billion are pledged in the form of ECA and DFI-covered loans. I believe the Government of Iraq would be prudent to take the necessary steps to convert these pledges into investments in its infrastructure.  

5) How interested are emerging markets and global markets investors in the Iraqi market?

The market appetite for Iraqi risk has improved significantly in the past couple of years.  The Iraq 2023 bond that Deutsche Bank lead-managed and which was 7-times oversubscribed at the time of issuance, is currently trading above par at $104 cash price, and 5.6% yield.  

These are relatively tight spreads when compared to the 5-year bond yields of its oil-producing single B name peers—e.g. Angola at 5.80%; Gabon at 6.70% and Ecuador at 6.80% -- as well as the bond yields of non-oil single B economies of Jordan and Lebanon at 5.00% and 11.65% respectively.  

6) Iraq’s fiscal deficits are expected to rise over the medium term according to the IMF. What could be the best fiscal policy for Iraq in your opinion?

Fiscal consolidation and the shrinking of the massive federal government’s balance sheet is probably the best fiscal policy.

In reality, the trend has been going in the opposite direction, with the previous and the current Iraqi governments having succumbed to fiscal expansionary pressures during periods of robust oil prices. 

I believe that supporting private sector participation in the economy would bring efficiencies as well as shrink the government’s balance sheet. 

As an example, inviting private sector investors to the independent power producer (IPP) program has been successful in materially increasing by over 7-8 megawatts Iraq’s power generation capacity. 

In the end, I believe that in order for Iraq to move away from reliance on the ebb and flow of oil, it would benefit from the establishment of sovereign wealth funds focused on infrastructure and impact investments, as well as saving and growing some of its oil revenue proceeds for the benefit of future generations of Iraqis.

[Butifldrm]

The relationship scores a + B rating

 

Central Bank Governor Ali Alaq "Economy News"

  

 Banks

Economy News - Baghdad:

Governor of the Central Bank of Iraq, Ali al-Alaq, in the classification of the magazine Global Finance, to the rank of B + after it was last year in the rank Bcame as a result of controlling inflation and anti-money laundering and terrorism financing and currency stability and interest rate management and monetary policy management wisely.

The Governor of the Central Bank of Iraq, Ali Alaq, won on June 28, 2018, as the best governor in the Arab world by the Union of Arab Banks during a ceremony held in Paris, after the achievements made at the local and international level in several areas, most notably the maintenance of Exchange and close the gap between the official price and the market price as well as the significant development in the payment system and electronic payment systems.

Global Finance, which ranked B + with 13 portfolios from several countries including Norway and Singapore, outpaced the governors of several countries including China, India and Japan.

"Central bankers are facing great pressure to maintain their independence as a result of political instability in the world," said Joseph Giarabuto, managing editor of Global Finance.

He said conservatives, who had a good rating, had led their countries in difficult times and had shown stable leadership.

Al-Allaq was elected Vice-Chairman of the Board of Governors of the Arab Monetary Fund for the current session, and will be its chairman in the next session.

Views: 286   Date Added: 09/08/2019

http://economy-news.net/content.php?id=17464

Edited August 10, 2019 by Butifldrm

[nannab]

B+   Things Getting bettererrrr every day  

Thank you Butifldrm  

[Butifldrm]

1 hour ago, nannab said:

B+   Things Getting bettererrrr every day  

Thank you Butifldrm  

 

Dang nanna,  this is Alak's rating and not Iraq's.  I guess it's good news because he has gone from a D in 2017 to a B+ in 2019.  Too late for him because more than likely he is going to be replaced.

 

 

Global Finance’s Central Banker Report Cards 2019

 

 

NEW YORK, August 8, 2019 — Global Finance magazine has released its Central Banker Report Cards 2019. The Central Banker Report Cards, published annually by Global Finance since 1994, grade the central bank governors of 94 key countries as well as the European Union, the Eastern Caribbean Central Bank, the Bank of Central African States and the Central Bank of West African States. For the first time, central bankers from the following countries have been added to the list: Cambodia, Gambia, Krygryzstan, Laos, Madagascar, Mauritania, Mauritius, Mozambique and Rwanda. Grades are based on an “A” to “F” scale for success in areas such as inflation control, economic growth goals, currency stability and interest rate management. (“A” represents an excellent performance down through “F” for outright failure.) Subjective criteria also apply. “Central bankers are facing the next potential recession with fewer arrows in their quivers and, in some quarters, unprecedented pressure on their independence,” said Global Finance publisher and editorial director Joseph Giarraputo. “With trade disputes and political instability gaining steam, nations look to central bank leaders to be steady hands on the world’s economic tillers, and this year’s top-rated bankers demonstrate just that kind of stable leadership, whether they are steering their nation through stormy times or battening the hatches with an eye to clouds on the horizon.” The full Central Banker Report Cards 2019 report will appear in Global Finance’s October issue. The Central Bankers earning an “A” grade in the Global Finance Central Banker Report Card feature in the October issue are:

 

https://d2tyltutevw8th.cloudfront.net/media/document/press-release-central-banker-report-cards-2019-1565288458.pdf

[yota691]

Standard & Poor's confirms its credit rating of Iraq at B- / B with a stable outlook

Economie

2019-08-24 | 03:41

 

2,270 views

 

Standard & Poor's confirmed its credit rating for Iraq at B- / B with a stable outlook.

The agency predicted that Iraq will record a budget deficit in 2019 and the coming years, due to the decline in oil prices and the needs of large spending. 

Standard & Poor's also forecast that growth in Iraq will recover in 2019, supported by expected increases in oil production and a gradual recovery of non-oil economic activity.

 

The agency said it could cut its ratings for Iraq if the government increased spending beyond its expectations.

[yota691]

S&P confirms Iraq's credit rating with a stable outlook

An archive image of the Iraqi flag

 24 August 2019 01:42 PM

Mubasher: Standard & Poor's has confirmed its rating of Iraq at " B- / B " with a stable outlook .

The agency said in a report, it may cut its ratings for Iraq if the government increased spending beyond its expectations.

She added that her ratings for Iraq are under pressure from its emerging political institutions, local political tensions and security risks .

It is likely that Iraq will record a budget deficit in 2019 and the coming years, due to low oil prices and the volume of large spending.

 It pointed to its forecast for recovery in 2019, supported by expected increases in oil production and a gradual recovery of non-oil economic activity .

Last month, Fitch maintained Iraq's credit rating at B- , a risk rating and a stable outlook. For oil in the south .

Fitch estimated that closing the strait for a month could result in Iraq losing $ 6.5 billion in oil revenues, or nearly 3 percent of GDP .

Iraq is the second largest producer of crude oil in the Organization of Petroleum Exporting Countries (OPEC) after Saudi Arabia, with an average daily production of 4.5 million barrels per day .

Iraq's budget shifted to a surplus of 8 percent as a percentage of GDP in 2018, after five years of deficit, as a result of the high price of Iraqi oil exports 33 percent.

[ChuckFinley]

Good news there. 

[6ly410]

Standard & Poor's confirms its credit rating of Iraq at B- / B with a stable outlook

Economy 01:55 - 24/08/2019

https://www.mawazin.net/Details.aspx?jimare=61564

Baghdad - Mawazine News
Standard & Poor's has confirmed its credit rating for Iraq at B- / B with a stable outlook.
The agency predicted that Iraq will record a budget deficit in 2019 and the coming years, due to the decline in oil prices and spending needs.
S&P also predicted that growth in Iraq would recover in 2019, supported by expected increases in oil production and a gradual recovery of non-oil economic activity.
The agency said it could cut its ratings for Iraq if the government increased spending beyond its expectations

[yota691]

An economic threat to Gulf states

Economie

2019-11-06 | 03:38

 

Source:

Sputnik

 

935 views

Fitch Ratings International revealed the ratings of the Gulf countries and their future financial economic situation, considering that they will be subjected to labor during 2019 and 2020 with pressure on the balance sheet of sovereign and external, and comes with the worsening of oil prices.

The Agency noted that the erosion of financial and external conditions is an important factor in the downgrade of the Gulf countries , noting that this is still a negative rating sensitivity in all countries in the region.

The report predicted that most of the financial balances in the Gulf states will deteriorate by 1 to 2 percent of GDP this year, assuming that the price of Brent oil will reach $ 65 per barrel, down from $ 71.6 per barrel in 2018.

Show the first half of the current results of a fiscal deficit more narrow in Bahrain and the Sultanate of Oman and Saudi Arabia, in exchange for the continued achievement of Kuwait and Qatar surpluses, but this is mostly due to the benefits of non - recurrent, such as profits "shares Aramco , the Saudi" special sale of assets in the Sultanate of Oman , The lagging effect of high oil prices temporarily on hydrocarbon revenues is budgeted.

Fitch explained that its fiscal forecast for 2019 reflects lower average oil prices and increased spending, which are traditionally concentrated by the end of the year, likely to change the price of oil by about $ 10, which will affect government revenues by 2 to 4 percent of GDP, which is Varies depending on the situation of each country.

[yota691]

Agency: the escalation of tensions will affect the classification of countries in the Middle East

© REUTERS / US ARMY

ECONOMIE

07:18 09.01.2020(Updated 07:25 09.01.2020)

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Fitch Ratings Agency revealed today, Thursday, the possibility of a rise in the region's escalations, especially with the recent events between the United States and Iran, this matter will directly affect the classification and indicators of some countries.

The agency noted that the major geopolitical risks play an important role in the sovereign ratings of the area that is likely to be closer to being affected.

The agency suggested that the sovereign ratings of the countries of the region are affected by any escalation of tensions, indicating that the geopolitical risks have already affected the rankings of many countries in the Middle East region, and they represented a major contributor that made them move towards lowering the Saudi rating from (A +) to (A) ) Last September.

The agency noted at the same time that most of the Gulf countries, with the exception of Oman and Bahrain, enjoy large financial reserves that would support their flexibility.

The agency noted that the escalation of tensions between the United States and Iran constituted a geopolitical headache for Iraq, which is affected by internal political risks and contributed to its classification at the level of (B- / stable), noting that if Iraq approaches Iran and goes towards Implementing his parliament’s decision to expel the American presence from his homes, this may lead to other risks at the level of the American response, which may result in imposing sanctions on the country.

At a time when "Fitch" felt that the United States and Iran should avoid a large-scale military confrontation, it would make downward risks to oil prices limited, given that the market has good supply abundance, with continued production growth in America and Brazil and Norway expects economic growth to remain sluggish.

Nevertheless, the agency noted that the risks of instability in the region have taken a growing trend during the recent period, indicating that the results of this escalation may include a major conflict or disruption in gas and oil supplies, including those that cross the Strait of Hormuz, what It may lead to a significant increase in oil prices, and a significant loss in export revenues by Gulf countries, with the exception of Oman, which will be less vulnerable to this impact.

Fitch has indicated that its recent reviews of sovereign ratings, which include Abu Dhabi, Saudi Arabia, Dubai and Iraq, may turn towards a negative trend if the region is subject to more tensions.

[yota691]

Saudi Arabia News

Fitch: Gulf countries downgrades excluded – Saudi Arabia News

1 day ago

 

5 Views

 

 

Fitch Rating Agency revealed that it took into account the current geopolitical disturbances, when the current geopolitical disturbances occurred, hinting that these disturbances will not affect the credit rating of these countries. The agency said in a recent report that Iraq and Lebanon are the two countries whose events may affect their conditions during the coming period. She stated that the impact of any Iranian move has already been included in the potential risks facing the countries of the Middle East region.It also reported that the geopolitical risks affect the sovereign credit rating of countries in the Middle East.

She pointed out that most of the Gulf countries have financial reserves that support their flexibility in dealing with any events. The IAEA report stated that the tensions between Iran and America haunt Iraq severely, especially as political risks greatly affect the credit rating of Iraq at “B-” with a stable outlook. The report indicated that there are risks that Iranian relations with its ally in Lebanon, Hezbollah, may complicate the efforts of Lebanon, which is classified as “CC”, to secure foreign funds.

Fitch noted that she believes that both Iran and the United States want to avoid a comprehensive military escalation, noting that the occurrence of this matter will cost Iran a lot, especially as its current economy suffers and that military superiority is in the interest of the United States.