Iraq raises $103m in post-Saddam bond sale
July 19, 2004
London - Iraq sold its first bonds since the ouster of Saddam Hussein more than a year ago, raising $103 million (R607.6 million) from domestic banks.
The central bank in Baghdad will today announce the yield on the 91-day 6.8 percent-interest notes.
Iraq's three-week-old government is selling debt to help pay local banks $3 billion of debt that dates from Saddam's rule and to reduce its reliance on international loans and revenue from oil. The government plans to hold twice-monthly auctions to raise as much as $1.2 billion by year-end.
"It shows the sophistication of the Iraqi banking system," said Richard Segal, research director at Exotix, a London brokerage for emerging market securities, including Iraqi debt.
Iraq, the world's number three holder of oil reserves, this month made its first payment on domestic debt to banks since 1981, paying 507 billion dinars (R2.13 billion) for three-month 6 percent-interest bills bought by banks during the days of Saddam's leadership.
Today's sale will help it repay another 600 billion dinars of debt that comes due on October 1, deputy finance minister Aziz Jaafar Hassan said in a weekend interview.
The government will have to overcome investor scepticism about its ability to pay debt. The nation's oil pipelines are subjected to frequent attacks by insurgents, about 140 000 US troops are stationed in the country and the nation still has to reach an agreement on $120 billion of foreign debt.
Meanwhile stockbrokers have reported roaring trade, making three times their monthly salaries by selling off shares bought just one week ago on the revamped Iraq stock exchange.
"It's simply fantastic. I sold shares worth 5 million dinars and made a profit of more than 2 million dinars in just one session. What a great day," exclaimed trader Abdul al Jabar.
The bourse, which opened on June 24, enjoyed record trading volumes on its sixth session to date, with more than 2 billion shares swapping hands.
"The volumes seen Sunday are simply historic," said Taha Ahmed Abdulsalam, the chief executive of the exchange.
"This is despite the primitive system we have. Imagine what it would be once the electronic trading terminals come," he said, referring to a plan to shift from the old-fashioned paper system to a fully automated trading floor.
Iraq's stock exchange is a product of more than a year's work by 12 brokerage firms and banks that jointly own it. It has 27 listed companies, with about 100 more due to go public in the next six weeks.
The bourse is open only on Sundays and Wednesdays for two hours at a time. - Bloomberg and Sapa-AFP.
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