Home
Iraq Bonds Gain Most in 11 Months on Maliki Resignation Optimism
Lyubov Pronina Aug 15, 2014 1:24 pm ET
Aug. 15 (Bloomberg) -- Iraqi government bonds advanced, sending yields down the most in 11 months, on speculation Iraqi Prime Minister Nouri al-Maliki’s resignation will improve the country’s security situation.
The yield on the dollar-denominated debt maturing in January 2028 fell 27 basis points to 6.88 percent at 6:10 p.m. in London, the biggest decline since September 2013. The rate decreased 61 basis points in the past five days, the first weekly retreat this month. The ISX General Index of equities in Baghdad gained 3.6 percent yesterday.
Maliki’s move ends a political impasse and may enable Prime Minister-designate Haidar al-Abadi to pull together a more inclusive government better able to counter Islamist militants advancing in the north. Iraq is riven with sectarian and ethnic rifts that threaten to tear the country apart. Yields on the government’s 2028 securities have risen 59 basis points since fighters from the Islamic State captured the northern city of Mosul on June 10.
“Investors expect that, with a new government in place, the outlook for the security situation and international cooperation will improve short-term,” Richard Segal, the head of international credit strategy at Jefferies International Ltd. in London, said by e-mail.
During Iraq’s government standoff, forces of the Islamic State have pushed into new areas of the north of the country and seized towns and a major dam near the city of Mosul. Thousands of ethnic Yezidis and Christians have been sent fleeing onto the exposed slopes of Mount Sinjar. The chaos is seen by investors as having loosened Maliki’s grip on power.
Maliki’s decision was one of several “encouraging developments that we hope can set Iraq on a new path and unite its people against the threat presented by the Islamic State,” Susan Rice, U.S. President Barack Obama’s national security adviser, said in a statement.
[You must be registered and logged in to see this link.]
