With an enticing yield of 6.75%, Iraq attracted $6.6 billion in orders for its $1 billion issue of five-and-a-half-year bonds in early August, its first independent bond sale in more than a decade. Iraq issued $1 billion of five-year bonds in January, which were fully guaranteed by the US government. That issue was sold with a coupon of 2.14%.
The new standalone issue demonstrates the ability of war-torn Iraq, a major oil exporter, to borrow under its own name. It also highlights the appetite of fund managers and pension funds for the higher yields available in emerging markets.
The strong demand for the issue was somewhat surprising, given that parliamentary elections in the spring of 2018 will likely be followed by additional political instability. Nonetheless, Fitch Ratings raised its outlook for the country from negative to stable in March 2017, due to improvements in the economy.