Iraq's plan to stop the issuance of international bonds because of the high yield

by day dreamer Sun 11 Oct 2015, 6:58 pm

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Post n°1

Iraq's plan to stop the issuance of international bonds because of the high yield

by day dreamer Sun 11 Oct 2015, 6:58 pm

10/12/2015 (00:01 pm) -

[ltr]Iraq's plan to stop the issuance of international bonds because of the high yield [/ltr]

BAGHDAD / Reuters

[ltr]Fadel prophet Iraqi Deputy Minister of Finance, said on Sunday that Iraq suspended its plans to issue international bonds because the yield to be paid will be very high.
Prophet told Reuters that Finance Minister Hoshyar Zebari, "ordered a halt to bonds because the interest rate will be high."
Iraq, which suffers from shrinking oil revenues because of low crude prices and the costs of the war on Daash and had held meetings throughout the week with investors in Europe and the United States last month in an effort to promote a version planned.
The aspires to raise about two billion dollars from the initial version is denominated in the US currency in the context of the series were versions will reach six billion dollars.
But informed sources said that investors demanded very high returns, which was Iraq will carry a heavy financial burden.

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by day dreamer Sun 11 Oct 2015, 7:04 pm

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Post n°2

Exclusive: Iraq halts plan for international bond issue due to high price

by day dreamer Sun 11 Oct 2015, 7:04 pm

Markets | Sun Oct 11, 2015 9:27am EDT
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BAGHDAD/DUBAI | BY AHMED RASHEED AND HADEEL AL SAYEGH

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[size=18]Iraqi Finance Minister Hoshiyar Zebari speaks during a news conference in Baghdad July 12, 2015.
REUTERS/KHALID AL-MOUSILY

[You must be registered and logged in to see this link.] has halted its plan to issue international bonds because the yield it would have to pay on the debt was too high, Deputy Finance Minister Fathil Nabi said on Sunday in a fresh blow to the country's efforts to finance itself.
Finance minister Hoshiyar Zebari "ordered that the bond be halted because the interest rate is high", Nabi told Reuters. He did not comment further and it was unclear when, if ever, the plan might be revived.
Iraq, which is battling an Islamist insurgency as well as shrinking oil revenues due to low crude prices, held a week of meetings with investors in Europe and the United States last month in an effort to attract interest in the planned issue.

It aimed to raise about $2 billion in an initial U.S. dollar-denominated issue, its first international bond sale in nine years. The bond, with a tenor expected to be five or seven years, would have been part of a series eventually totaling up to $6 billion.
The government, which has projected a fiscal deficit of about $25 billion this year in a budget of roughly $100 billion, said it needed the proceeds of the bond to pay salaries and fund infrastructure projects in the oil and gas, electricity and transportation sectors.
But investors demanded extremely high yields, which would have been financially burdensome for Iraq if it had agreed to pay them, sources familiar with the matter said.
Zebari told members of parliament's financial committee last week that "it was too difficult to accept paying an 11.5 percent yield in return for an $2 billion bond", the committee's secretary Ahmed Haji Rashid told Reuters.
Iraq hired three top global banks to arrange the sale, Citigroup, Deutsche Bank and JP Morgan Chase, but many institutional investors baulked at the risks.
Standard & Poor's assigned Iraq a B-minus credit rating last month, six notches below investment grade, saying security and institutional risks were among the highest of any sovereign it assesses, on a par with [You must be registered and logged in to see this link.] and above Greece.
"There was an expectations mismatch on the Iraq bond pricing. They are an oil exporter with ISIS in their backyard, and that weighed negatively on the bond sale, besides sluggish oil prices," said an official at a European investment firm.
It was not immediately clear how Iraq would cover its deficit without the hoped-for bond proceeds, although aid from international donors looks likely to bridge the gap for a while at least. The World Bank said in July it would provide Iraq with loans totaling $1.7 billion, while the International Monetary Fund agreed this year on an $833 million loan program.
Bank of America Merrill Lynch said in a report last month that a failure by Iraq to sell bonds might eventually persuade it to seek a bigger loan from the IMF

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