Iraqi Kurdish plans for greater financial autonomy are being hampered by opposition to a debut bond sale that would leave the region paying one of the highest borrowing rates in sovereign markets. Oil-rich Kurdistan had been expected to make its debut on international capital markets earlier this week with a $500m-$1bn sale of quasi-sovereign debt.
Precisely Masod7. Anyone who thinks the KRG are going to get $5bn just like that are severely misguided. Could be months away before any papers are signed and even further down the line for payments to Kurd oilies. Trouble is everything takes forever in the oil business and words such as potential and near future are meaningles. No wonder Buffet sold out. Wish I could!
Kurds will use the Bond money to finance the war is the reality (and they need it - since Baghdad has kept most of their (ie our) oil revenues and are now hording the modern weapons sent to the region recently) - but solid International Bankers can't be seen to be part of the clusterflux which we finance.... so pork pies may be at play - hopefully a token amount of the $5bill MIGHT be coming our way to satisy the lenders conditions - read on:
On Monday, an announcement appeared on the Kurdistan Regional Government’s (KRG) website, confirming that Deutsche Bank and Goldman Sachs have been appointed to help the semi-autonomous Iraqi state meet with international bond investors, "with a view to a potential transaction in the near future".
Confirmation of the mandate suggesting the banks were working with Kurdistan, which needs the money in several areas: infrastructure development, to counter weak oil prices, and to finance a war against ISIS.
It’s the last part that is going to make this a tough sell. Do institutional investors want to be financing wars, no matter how much they might appear to be backing the more just side? Just how comfortable can one be with the repayment profile if it depends, somewhat heavily, on not losing that war?
No doubt any prospectus will link the funds directly to a specific infrastructure play – likely the Ceyhan pipeline or something similar – but a certain institutional queasiness is to be expected.
It’s not clear if the deal will be index-linked or a private placement. Investors presumably would prefer a deal structured by revenues from oil production to allay fears over the refinancing capacity of the besieged administration, which oversees a region with an estimated 45 billion barrels of onshore oil reserves – equivalent to North Sea oil production since the 1970s.
Figs released yesterday show it's W.African oil fields produced more than expected. Forecast to produce 72-78k bopd. H/1 revs fell $570m to $800m while gp was $300m down from $700m. Should make our nos interesting come Aug!
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