• Iraq to begin issuing $6bn in bonds in 2015
  • The US’ Citigroup, JPMorgan Chase and Germany’s Deutsche Bank have been appointed to arrange the issuance
  • UK-based Fitch Ratings has assigned a B- rating to Iraq’s sovereign debt

Iraq has appointed three banks to prepare a $6bn bond issuance, Muneer Mohammed Omran, director general of the Iraqi Central Bank’s investor department told Bloomberg.

They are US-based Citigroup and JPMorgan Chase, and Germany’s Deutsche Bank.

The first tranche of bonds will be issued in 2015, according to Bloomberg.

London-based Fitch Ratings Agency rated Iraqi sovereign debt as B- earlier this month.

This strengthened Baghdad’s ability to issue bonds, despite the rating classing the bonds as junk, or highly speculative, according to Fitch’s definitions. Other major ratings agencies have not rated the country.

According to Fitch, the low rating reflects “not only insecurity and political instability but also corruption, government ineffectiveness and weak institutions”.

The Washington-based IMF predicts Iraq will have a budget deficit of 12 per cent of GDP in 2015.

Iraq’s budget has been hit by several crises in 2015, including the ongoing counter-insurgency against Islamic State in Iraq and Syria (Isis) and continuing falls in oil prices. Recent mass protests over electricity cuts and corruption have also prompted Prime Minister Hadi al-Abadi to introduce reforms, including cutting the number of senior government positions.

The deficit will also be funded by a $1.24bn IMF emergency loan, approved in July.

Iraq issued $2.7bn of 22-year bonds in 2006, with a coupon rate of 5.8 per cent.

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