Prospects dwarfed by the first issue of bonds for foreign Bkordstan

Twilight News / was 10 of August plans Bkordstan, the Iraqi territory in which the semi-autonomous, and to benefit from the international markets, totally ready, but it was canceled due to low oil prices and the high level of geopolitical tensions, in addition to the difficult frameworks of emerging economies, according to fund managers .

Representatives have met for the Kurdistan Regional Government, in June, a number of investors to gauge potential demand on the first version of foreign bonds intended to help finance infrastructure and development projects throughout the region.

Investors said at the time that they are interested in the matter, but cautious at the same time.After seven weeks later, it seems unlikely the issuance of these bonds.
The price of oil and nearly six months are at low levels and that the relationship between Erbil, the regional capital, and Baghdad is increasingly difficult.

In the meantime, it has become more difficult for the smaller and less developed countries to benefit from the markets before waving the Fed later this year to raise the amount of interest.

Said one fund manager, "I think that the agreement has been delayed deservedly, because of weak oil mixture, and the deterioration of the geopolitical situation, and sales operations and large-scale in emerging markets, which led to a whole reduced investor appetite for new issues."

He added that he had not heard anything from policymakers or bankers returning to them since their meeting in London.

Kurdistan and confined in an area between Syria, Iran and Turkey, which launched air strikes against Iraq in the incident and fighters of the organization of the Islamic state in Syria PKK camps, but also battling rebels of the Kurdistan Islamic state regulation on the southern and western edges.

And a federal entity recognized by Baghdad, Kurdistan has the ninth largest oil reserves in the world and holds many of the attributes of the state, including effective control over its territory and its armed forces.

Kurdistan has passed a law which allows it to raise funds through external borrowing, but with the absence of the possibility of getting support from the central government in Baghdad, which in turn put forward plans to raise $ 5 billion through the issuance of international bonds this year.

Said Jacob Christensen, a senior economist at Bank of Exotic, that the questions remain about the flow of private capital Arbil revenue.

An agreement was concluded in December, which was appointed to the Kurdistan transporting crude oil to the Iraqi public oil marketing company SOMO in exchange for Baghdad to allocate a budget for payment of Erbil, where over this Agreement problems from the outset as each party accused the other of failing to honor the deal.

Sources of income
Go oil sales revenues by SOMO to US account, and can only be for the Iraqi government to benefit from it, while independent crude oil is collected Kurdish payments sold in the continued Turkish state bank account, and be accessible to Erbil.

Christensen said, "There is an agreement that you go .. all Iraqi revenues through US accounts, so it will be very difficult to schedule anything out of this arrangement if you want access to the American blessed though oil revenues will be critical to support any version.

"We know somewhat how much they produce in the field of oil .. but if they can not sell it seriously and constantly out of Iraq, then that is a big problem."

Without ensure Baghdad, the bond would not be included in the main standards for emerging debt, and have little liquidity and less attractive for a number of investors, and require higher insurance premiums.

Kaaan Nazlam, head of emerging markets economist at Neuberger Berman asset management, "and said it is not a sovereign, if oil output has been shut down, they can not go to the International Monetary Fund or the World Bank as a last resort, and this makes them more credit bonds seriousness.

Looking at the pricing, fund managers predicted that the Irbil Order prices rise on Iraq, the issue of who owns the 2028 revenues denominated in dollars, including nearly 10 percent.Christensen is expected to Kurdistan will pay at least 200-400 basic points premium for the Iraqi sovereign issuances.

Accordingly, Erbil has pledged that it planned to move forward on this issue.

A senior official in the Kurdistan Regional Government, said in connection with the offer, "we are still interested to proceed with the issuance of bonds."

He added, "We have developed the legal right to borrow, and we expressed our intention to borrow and now it's just a question of combination of the two, and in fact the conclusion of the deal."