Iraq revives $2 billion bond sale scheme

Iraq has revived a plan to sell $2 billion in bonds in 2016 as the government is containing the threat posed by Islamic State (IS) militants, Finance Minister Hoshiyar Zebari told Reuters Monday.

The 2016 budget law allows the government to sell $2 billion in bonds should it lack resources to meet its spending target, he said. The plan to sell bonds, the first on the international market by the Iraqi government in about a decade, was put on hold in October as investors demanded an 11 percent yield that Zebari said was too high.

The government is hoping to get a better deal should it decide to go to the bond market in 2016 as the armed forces are making steady gains against Islamic State militants and the government’s financial position has been strengthened with support from the World Bank and the International Monetary Fund, Zebari said.

“This trust or confidence of the international institutions in the country will make the issuance of sovereign bonds easier,” he said.

“The liberation of Ramadi, I think, will enhance our position,” he added, referring to the western Iraqi city retaken by the army from Islamic State militants on Sunday. Iraq, with a B- rating assigned by Fitch in August, has a $2.7bn 2028 note outstanding, sold in 2006.

Crude oil prices more than halved in the past 18 months, hitting government income that depends on oil sales for 95 percent.

Source: Reuters