World Economy

Iraq Revives $2b Bond Plan

Iraq Revives $2b Bond PlanIraq Revives $2b Bond Plan

Iraq, struggling with low oil prices and a war with Islamic State militants, may raise $2 billion in eurobonds this year and will probably ask the International Monetary Fund for more aid.

OPEC’s second-biggest oil producer may tap international bond markets in the second half of 2016, Finance Minister Hoshyar Zebari said in a telephone interview on Monday. A planned sale was halted last year because investors demanded yields that the government deemed too high. Iraq is rated B- by Standard & Poor’s, six levels below investment grade, on par with debt-laden Lebanon and Greece, Bloomberg reported.

The debt auction “is on the agenda,” he said. “We are in a better position this year to issue than last year, when interest rates were too high.”

Iraq raised oil output last year by 20% to make up for lost revenue after crude prices plummeted. The government, which has forced Islamic State militants from some key cities and has pledged to attack the group’s Iraq stronghold of Mosul, has agreed to an IMF staff-monitored program that may eventually pave the way for more aid from the Washington-based lender.

The yield on the nation’s only dollar bonds, a 5.8% debt due in 2028, jumped last month to 12.5%, the highest level since April 2009, as Brent crude sank to the lowest in more than 12 years. It fell to 11.9% in London.

The IMF provided $1.25 billion in emergency assistance to Iraq last year to plug the country’s budget deficit. Authorities and the fund will hold more talks, and Iraq will “likely consider” asking for more assistance, Zebari said. It was too early to decide on the size of the possible loan, he said.