A ship is connected to the Basra Oil Terminal twelve nautical miles off the Iraqi coast close to the port town of Umm Qasr (file).  Iraq, holder of the world’s fifth-largest oil reserves, is looking to bolster its finances amid civil conflict and the global slump in oil prices.

Bloomberg/Dubai


Iraq hired banks for its first international bond issue in almost a decade, seeking $6bn to help plug a widening fiscal deficit.
The government appointed Citigroup Inc, Deutsche Bank AG and JPMorgan Chase & Co, said Muneer Mohammed Omran, director general of the central bank’s investor department in Baghdad. The bond programme will be in tranches, with the first sale coming this year, he said by phone yesterday.
Spokesmen for the banks declined to comment.
Iraq, holder of the world’s fifth-largest oil reserves, is looking to bolster its finances amid civil conflict and the global slump in oil prices. Fitch Ratings expects the fiscal deficit to top 10% for 2015 because of lower crude prices, higher military spending and costs associated with civil unrest. It ranked Iraq five levels below investment grade this month in its first ratings for the country.
“Iraq is going through some difficulties at the moment because of its conflict with ISIS, but oil production is at a record high,” Anthony Simond, a London-based investment analyst who helps manage $13bn of emerging-market debt at Aberdeen Asset Management, said by e-mail. “Things could look a lot different if we see a rebound in oil prices.”
The country plans to meet with international investors as soon as next month, said two people familiar with the programme, asking not to be identified because the talks are private.
Iraq’s bonds have fallen 4.5% in the past three months, more than double the loss on JPMorgan Chase & Co’s EMBI Global Diversified Index. The yield on its notes due January 2028 rose 66 basis points this year to 8.55% yesterday.
Iraq has struggled to emerge from violence after the US-led occupation, with the army trying to recapture large areas of the country from Islamic State in a campaign backed by the US Increased oil production has coincided with a market slump. The International Monetary Fund approved $1.24bn of emergency financing in July.
Government debt may equal 51% of Iraq’s gross domestic product by the end of 2015, with the ratio forecast to increase next year, Fitch said. Savings built up over years of high oil prices have largely been eroded, the ratings firm said.
Iraq’s crude production climbed to an all-time high of nearly 4.2mn bpd in July, according to the International Energy Agency, with record exports from southern terminals mostly unscathed by Islamic State militants.


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