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 10/09/08
Iraq settles $1.2 bln in Saddam-era commercial debt
Iraq has settled
$1.2 billion in outstanding Saddam-era commercial claims against the Iraqi
government and public sector after concluding a debt buyback programme, it said
on Wednesday.
Iraq opened this latest commercial debt buyback programme
in January 2008 and said it would qualify claimants for a cash buyback of 10.25
percent of the outstanding amount, including principal and accrued
interest.
The terms of the programme were "substantially similar to those
of Iraq's previous cash settlement offers," Iraq's Ministry of Finance said in a
statement, adding they were comparable to the terms of Iraq's 2004 Paris Club
deal.
The latest programme brings total commercial debt claims settled by
Iraq to $20.9 billion, the finance ministry said.
It said 85 claimants
participated in this offer, bringing the total number of claimants to 576 since
Iraq's first buyback programme launched in 2005 for commercial claims from the
era of Saddam Hussein, overthrown by the U.S.-led invasion in 2003.
Iraq
restructured commercial claims to launch $2.7 billion worth of sovereign bonds
in January 2006.
The bonds mature in 2028 but start to pay back the
principal from 2020. The bonds began trading at 69 cents on the dollar and fell
as far as 55 cents last year, but have since recovered to 73 cents
<462652AA6=RRPS>, boosted by increased confidence over Iraqi security and
the economy.
Iraq has also settled debt with 58 countries, the finance
ministry said in Wednesday's statement.
The United Arab Emirates waived
$7 billion of Iraqi debt in July, and Kuwaiti media have said Kuwait may forgive
Iraq's $15-16 billion debt.
Investors have been looking for settlement by
Middle Eastern countries of Iraqi debt to provide a further boost to the Iraqi
economy.
The Paris Club of 19 rich creditor nations agreed in 2004 to
write off 80 percent of its $40 billion debt to Iraq, and Russia wrote off most
of Iraq's $12.9 billion debt earlier this year.
Analysts expect the
remaining 20 percent of the Paris Club debt to be written off at the end of this
year, with non-Paris Club countries following suit.
"There are two major
stories for investing in Iraq -- one is oil and the other is the Paris Club
restructuring," said Turker Hamzaoglu, economist for Middle East and North
Africa at Merrill Lynch, which recommends an overweight position in Iraqi
debt.
Hamzaoglu calculates Iraq's debt to GDP ratio falling to 36 percent
next year from 160 percent, due to debt restructuring and increased domestic
growth.
Iraq settles $1.2 bln in Saddam-era commercial debt - Source
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