Is Transparency Coming to the QIA at Last?
1 July, 2015Greece: What the IMF Missed Payment Means for the Country and the Euro
1 July, 2015Euromoney, July 2015
On June 22, an announcement appeared on the Kurdistan Regional Government’s web site, 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 echoes Euromoney’s article in April (link: http://www.euromoney.com/Article/3442056/Iraq-finance-Geopolitical-pawns.html) suggesting the banks were working with Kurdistan, which needs the money for several things: 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 tricky 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 will be forgivable.
Anyway, it’s not conflict that’s delayed it getting this far, but legislation. The KRG made its announcement following the passage of the Law to Raise Funds Through Borrowing by the Kurdistan Region – Iraq. That law allows Kurdistan to raise funds in its own name, part of a trend that may eventually, in more peaceful times, see it secede and become an independent nation.
