Iraq started marketing a $1 billion bond on Wednesday in what would be its first international debt issuance as a standalone credit since 2006, a document issued by one of the banks leading the deal showed. Julian Satterthwaite reports.
It's not an obvious investment opportunity. Iraq still recovering from over 30 years of conflict and the battle against Islamic militancy. But now it just might be the place for bold investors to put their billions. The country, which has huge oil reserves, started marketing a one billion dollar bond Wednesday (August 2) - it's first independent debt sale in a decade. Reuters Davide Barbuscia is watching the markets from Dubai. (SOUNDBITE) (English) DAVIDE BARBUSCIA, REUTERS MIDDLE EAST FIXED INCOME CORRESPONDENT, SAYING: "Iraq is in extreme need of external financing. The $1 billion bond that they're raising is just a drop in the ocean in terms of the budget deficit of the country. At the moment, just for 2017, the country has a budget deficit of over $20 billion, so it really needs to raise financing from multilateral and development finances but also from commercial lenders and bond investors." The war-torn country offers alluring profits to emerging markets investors. Initial price guidance for the bond promised interest of about seven percent. That's many times what you'd get on any debt from a major developed country. Fund managers say Iraq actually looks good compared to other strife-battered emerging markets such as Ukraine. With major backing from international donors it isn't about to go bust. But risks abound. Iraq's Spring parliamentary elections could see new political instablility and Islamic State is still not fully vanquished. Iraq's bond buyers will need strong nerves.