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Citigroup Inc. (C)’s decision to open in Iraq and the easing of United Nations sanctions dating back to the Saddam Hussein era are driving yields on the OPEC oil producer’s bonds down from a four-year high.

Yields on the Middle Eastern nation’s $2.7 billion security due January 2028 slid 137 basis points to 7.43 percent in the eight days from June 24 after Citigroup became the first U.S. lender to venture into Iraq since Hussein was toppled a decade ago. That compares with a 39 basis-point drop to 5.19 percent in the HSBC/Nasdaq Dubai Middle East Conventional Sovereign US Dollar Bond Index in the period. Iraq’s bonds yielded 7.4 percent at 4:20 p.m. today in Baghdad.

Citigroup, JPMorgan Chase & Co. (JPM) and Standard Chartered Plc (STAN) are the latest international banks to expand in the second-largest producer in the Organization of Petroleum Exporting Countries. The UN Security Council added to investor confidence by voting on June 27 to remove the threat of military enforcement on the issues of Kuwaiti people, property and archives missing since Iraq invaded the country in 1990.

Citigroup’s announcement “had an impact because it meant that big banks are going into Iraq,” Sanjay Motwani, president of Singapore-based Sansar Capital Management LLC, which manages a fund with $30 million invested in Iraqi equities, said in a telephone interview. “Therisk premium for Iraq sharply dropped after June 24, mainly in anticipation of the UN decision to ease the sanctions, which was eventually adopted June 27.”

Oil Output

Iraq, with the world’s fifth-largest proven oil reserves, is boosting output and rebuilding its economy after decades of sanctions, war and neglect. Exxon Mobil Corp. (XOM)OAO Lukoil (LKOH) and other companies helped boost production by 24 percent in 2012. The government is increasing spending by 18 percent this year to $118 billion, and the International Monetary Fund forecasts an annual economic growth rate of 9 percent, the fastest after Libya among 18 countries in the region.

The spread between Iraqi sovereign bonds and U.S. Treasuries, which peaked this year at 653 on June 25, has narrowed since then by 127 basis points, or 1.27 percentage points, JPMorgan Chase’s EMBIG Sovereign Spread Iraq index shows. The spread was 506 basis points yesterday.

‘Strong Performer’

“In a global context, Iraq has been a strong performer,” Gabriel Sterne, a London-based economist at Exotix Holdings Ltd. whose research includes 40 frontier-market sovereigns, said in a July 16 e-mail. “There is the usual trade-off between political risk and strong revenues that investors have to weigh up. So I think the bonds are roughly fairly valued.”

Car bombings and other violent acts threaten to undermine the country’s stability. The yield on Iraq’s bonds gained 20 basis points after July 2 amid a wave of deadly violence. At least 337 people have been killed in attacks across the nation so far this month, the Associated Pressreported, citing police and local officials.

Iraq faces internal political wrangling and a dispute between the central government in Baghdad and the semi-autonomous Kurdish region, which has halted oil exports by pipeline since December. Street protests by minority Sunni Muslims, worsening relations with Turkey and the civil war in neighboring Syria contribute to tensions in the country.

UN Vote

The UN Security Council boosted Iraq’s prospects when it agreed that the issue of missing Kuwaiti citizens and disagreements over Kuwaiti archives and property should be resolved peacefully, under Chapter 6 of the UN Charter. The council kept the constraints pertaining to an arms embargo and war reparations under Chapter 7, which allows the use of force.

Iraq has set aside 5 percent of its oil revenue to pay compensation to Kuwait for war-related damages and will repay the $11 billion it owes by 2015, Iraqi Foreign Minister Hoshyar Zebari said June 12.

“The fact that some sanctions under Chapter 7 have been lifted means that it will be easier for international banks to trade and have a relationship with local Iraqi banks,” Sansar’s Motwani said.

Foreign banks were barred from the nation until after the U.S.-led invasion ousted Hussein’s government. Today, 15 international banks operate in the country of 33 million people. They compete with seven state banks, 23 private lenders and nine Islamic banks, according to the central bank’s website.

Asiacell Listing

The country’s stock exchange attracted investors in the February listing of Asiacell Communications PJSC, which raised $1.3 billion in the Middle East’s biggest initial public offering since 2008.

Citigroup plans to open representative offices and branches in Baghdad and the cities of Basra and Erbil to benefit from an estimated $1 trillion of infrastructure spending, Mayank Malik, the U.S. bank’s chief executive officer for Jordan, Iraq, Syria and the Palestinian territories, said in a June 27 interview. The lender is also among international banks seeking to finance a pipeline to export Iraqi oil and natural gas through Jordan.

Standard Chartered plans to open branches this year in Baghdad and Erbil, followed by a third office in Basra, a southern oil hub, in 2014. JPMorgan Chase signed a one-year agreement on July 6 to help the Trade Bank of Iraq finance imports of goods and services, John Gibbons, managing director and EMEA regional executive for the New York-based bank, said in a July 7 interview.

“Foreign banks entering Iraq are mainly there for trade finance, as companies from their respective countries need financial tools and services to do business in Iraq,” Abdul-Aziz Hassoun, executive director of the League of Private Banks, an Iraqi business group, said by phone on July 17.

“Iraq is a promising market because of the rising oil revenue and infrastructure projects which have helped boost the level of trade finance on an annual basis,” he said.

Source: Bloomberg

By Omar al-Shaher for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

MPs from the ruling State of Law Coalition and the Kurdistan Alliance confirmed the presence of positive vibes between the federal government in Baghdad and the Kurdistan Regional Government (KRG) in Erbil regarding the possibility of passing the Oil and Gas Law, which governs the management of oil wealth in the country.

The law is supposed to be passed during the current legislative session, which ends in early 2014. However, the MPs preferred to maintain discretion regarding information on the final draft of the law.

A high-ranking source in the office of Iraqi Prime Minister Nouri al-Maliki told Al-Monitor that “Prime Minister Maliki and KRG President Massoud Barzani discussed during the latter’s latest visit to Baghdad an amended draft of the Oil and Gas Law and agreed on showing it to their partners, so that it can soon be passed in the Iraqi parliament, before the current legislative session ends in early 2014.”

However, the federal government and the semi-autonomous KRG disagree on oil and its imports in the northern provinces. While Baghdad demands that the agreements with foreign and local companies on the drilling operations happen with its knowledge and that the region send the export revenues to the federal government, the Kurdistan region wants the federal government to pay the dues of oil companies working for it, before requiring oil revenues to be sent to Baghdad.

The Oil and Gas Draft Law has undergone several amendments since 2011, but it has not received the needed consensus yet.

ABB has won an order worth around $30 million from Zagros Energy to build four new transmission and distribution substations in the Kurdistan region of Iraq, as part of an overall initiative to expand and strengthen the regional power grid. The order was booked in the second quarter.

Demand for reliable power is growing at a rate of 10 to 25 percent per annum, thanks to industrial growth, construction projects and overall economic development. Currently, the Kurdistan power grid supplies around 2,750 megawatts (MW) of electricity with more than 90 percent of the capacity owned and operated by independent power companies.

The increasing demand for electricity means that outages and blackouts are frequent. In the short term, a capacity expansion to approximately 4,000 MW is planned; longer term, the ambition is to reach 10,000 MW, which would open up the possibility of exporting power to neighboring countries.

ABB’s project scope includes the design and supply of the substations and will enable an additional 600 MW of power to the region. The substations are based on GIS technology, which was selected for its compact footprint, since they are to be located in the center of the city.

Two will be connected with 132 kilovolt (kV) underground cables due to the lack of space for overhead lines. Circuit breakers and air-insulated switchgear, control and protection systems, capacitor banks as well as power transformers and other high-voltage equipment, will form part of the key product supplies. The project is scheduled for completion in 2014.

“These substations will go a long way towards helping this developing region meet the increasing demand for electricity,” said Oleg Aleinikov, Head of ABB’s Substations business within the company’s Power Systems division. “They will also strengthen the grid, reduce outages and improve the reliability of power supplies to consumers.”

(Source: ABB)

By Omar al-Shaher for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
MPs from the ruling State of Law Coalition and the Kurdistan Alliance confirmed the presence of positive vibes between the federal government in Baghdad and the Kurdistan Regional Government (KRG) in Erbil regarding the possibility of passing the Oil and Gas Law, which governs the management of oil wealth in the country.
The law is supposed to be passed during the current legislative session, which ends in early 2014. However, the MPs preferred to maintain discretion regarding information on the final draft of the law.
A high-ranking source in the office of Iraqi Prime Minister Nouri al-Maliki told Al-Monitor that “Prime Minister Maliki and KRG President Massoud Barzani discussed during the latter’s latest visit to Baghdad an amended draft of the Oil and Gas Law and agreed on showing it to their partners, so that it can soon be passed in the Iraqi parliament, before the current legislative session ends in early 2014.”
However, the federal government and the semi-autonomous KRG disagree on oil and its imports in the northern provinces. While Baghdad demands that the agreements with foreign and local companies on the drilling operations happen with its knowledge and that the region send the export revenues to the federal government, the Kurdistan region wants the federal government to pay the dues of oil companies working for it, before requiring oil revenues to be sent to Baghdad.
The Oil and Gas Draft Law has undergone several amendments since 2011, but it has not received the needed consensus yet.

Source: Iraq-BusinessNews.com.

Post your commentary below.

By John Lee.
Iraq has officially requested the UN Security Council to extend the term of UNAMI in Iraq for another year, reports Aswat al-Iraq.
The request was submitted by Iraqi ambassador Mohammed Ali al-Hakeem to the United Nations.
He requested that UNAMI will have logistic assistance to provide adequate observers for the coming parliamentary election, to be held in the middle of next year.
Ambassador Hakeem also denounced the attacks on the anti-Iranian Camp Liberty residents and praised Albania for granting refugee status to 270 camp residents, as well as the German government for receiving 100 Iranians.
On the current demonstrations, he pointed out that the government is seriously trying to meet the legal demands of the demonstrators according to Iraqi constitution.
(Source: Aswat Al Iraq)

Source: Iraq-BusinessNews.com.

Post your commentary below.

Korek Telecom customers in southern Iraq will soon experience high-speed mobile broadband and better voice call services with improved coverage.
For this, Korek Telecom, a leading telecom operator in Iraq, has selected Nokia Siemens Networks to deploy its advanced radio, microwave transmission and packet core network elements, using its comprehensive services. The operator has also renewed its care and managed services contract with the company.
“We wanted to provide better internet experience and improved voice call services for our customers in Iraq,” said Ghada Gebara (pictured), Chief Executive Officer, Korek Telecom. “To achieve this, we needed a globally renowned technology partner, so we selected Nokia Siemens Networks. With Nokia Siemens Networks’ advanced radio and core network technology, we will soon be able to introduce high-speed mobile broadband and enhanced voice services to our customers in southern Iraq.”
“To fulfill the needs of Korek Telecom which is growing fast in the Iraqi telecom market, we are committed to providing strong technology support to the operator,” said Mikko Ylä-Kauttu, head of customer team Korek Telecom at Nokia Siemens Networks.
“Our radio and core network will ensure more throughput, improved coverage and higher quality to help Korek Telecom satisfy existing customers and attract new ones. In addition, our comprehensive services will ensure the rollout is fast and efficient, with everything working seamlessly.”

Source: Iraq-BusinessNews.com.

Post your commentary below.

ABB has won an order worth around $30 million from Zagros Energy to build four new transmission and distribution substations in the Kurdistan region of Iraq, as part of an overall initiative to expand and strengthen the regional power grid. The order was booked in the second quarter.
Demand for reliable power is growing at a rate of 10 to 25 percent per annum, thanks to industrial growth, construction projects and overall economic development. Currently, the Kurdistan power grid supplies around 2,750 megawatts (MW) of electricity with more than 90 percent of the capacity owned and operated by independent power companies.
The increasing demand for electricity means that outages and blackouts are frequent. In the short term, a capacity expansion to approximately 4,000 MW is planned; longer term, the ambition is to reach 10,000 MW, which would open up the possibility of exporting power to neighboring countries.
ABB’s project scope includes the design and supply of the substations and will enable an additional 600 MW of power to the region. The substations are based on GIS technology, which was selected for its compact footprint, since they are to be located in the center of the city.
Two will be connected with 132 kilovolt (kV) underground cables due to the lack of space for overhead lines. Circuit breakers and air-insulated switchgear, control and protection systems, capacitor banks as well as power transformers and other high-voltage equipment, will form part of the key product supplies. The project is scheduled for completion in 2014.
“These substations will go a long way towards helping this developing region meet the increasing demand for electricity,” said Oleg Aleinikov, Head of ABB’s Substations business within the company’s Power Systems division. “They will also strengthen the grid, reduce outages and improve the reliability of power supplies to consumers.”
(Source: ABB)

Source: Iraq-BusinessNews.com.

Post your commentary below.

Warned of the risk of non-existence globally

is a credit rating of any country in the world better than the non-existence because it gives the degree of adoption by countries of the world to assess the country’s economy for the purpose of investment and the exercise of economic activities and other businesses.

saw expert financial and banking d. Appearance of Mohammed Saleh it is possible rating Country credit through bonds sold in global markets because the presence of credit rating, though low, is better than no rating mainly because there is no rating confirms that the country is a threat to all countries of the world.

are rated countries in the world credit ladder classification consists of 4 grades are A, B, C and D as well as variables that represent signal + or – and Petkrarat different. Saleh said in a statement to the (morning) that he must begin Iraq is now negotiating for the purpose Ranked credit.

and launched the first round of the Conference of Finance and trade in June of last year, the presence of the representative of the U.S. Department of Commerce Cameron F. Kerry, in addition to economic circles in Iraq, it was agreed during which Iraq to encourage investors to come to Iraq and classification of credit to be able to give credit for foreign investors, as well as the importance of that goes on Iraq in this Category to give guarantees in the investment opportunities and confidence to recover their capital.

The Fitch or Fitch classifies countries credit is an international institution globally recognized and is a wholly owned subsidiary of the Company Hirst, which has in April 2012 to increase its stake in Fitch Group to 50 percent , one of the three companies rated a major addition to Standard & Poor’s and Moody’s, The company was founded by John Knowles Fitch in late 1913 in New York City as the Fitch Publishing, merged with IBCA Ltd., based in London in December 1997.

drew Saleh Although the negotiations began last year, but the Chapter VII represented the main obstacle in the not to grant credit rating as the country represents a threat to international peace and security.

, and pointed out that Iraq is now out of Chapter VII of the UN Charter and moved to Chapter VI him, which means he is now no longer poses a threat but on the contrary, he entered the phase of peace and development, noting that the credit rating not yet been determined, but – as I believe – in the class B-and this is a good indicator

and explained that the rating is through the public debt and the issuance of remittances Treasury or government bonds, particularly in international markets, or those bonds that are sold outside of Iraq except for support and one Qaeidah Iraq in return for private-sector debt under the Paris Club agreement. added when sold bonds then sold at about 60 cents, then increased their discount for up to 90 cents, and in this case became as if Iraq’s rated automatically among the countries that have rated within the degree of B-giving Iraq a good indicator in the period of the existence of Chapter VII.

, and stressed that Iraq would emerge from Chapter VII and the entry of foreign companies, in addition to the presence of liquidity, high financial and political stability and the presence of oil wealth, are all factors that would raise the credit rating of the degree of Iraq.

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