Iraq ups interest rate on bond issue to boost sales

BAGHDAD / Reuters

Iraq has raised the interest rate on a local bond issue worth 1.5 trillion Iraqi dinars ($1.3 billion) to boost sales, central bank spokesman Aycar Jabbar recently said.
The central bank has increased the rate to 8 percent from the 6 percent offered on March 15, when the two-year bonds went on sale, he told.
All those who have bought the bonds will receive the same interest rate regardless of when they bought them, he said.
The central bank will also be keeping the sales period open until the issue is fully subscribed, he said.
The sale is part of an effort to plug a government deficit caused by tumbling oil prices and the cost of fighting an Islamic State insurgency.
The bonds are sold on behalf of the Finance Ministry and mature on March 14, 2018.
It is the first local bond sale to the public since 2003, when Saddam Hussein was overthrown. Iraq already issues Treasury bills to domestic banks and has international bonds outstanding.
The central bank had initially said in March that the local bonds would be sold from March 15 to April 15, to the public and local lenders.
The Central bank of Iraq’s primary objectives are to ensure domestic price stability and to foster a stable competitive market-based financial system. The bank shall also promote sustainable growth, employment and prosperity in Iraq.
As of December 2009, the bank reported total assets valued at over 57 trillion dinars. The bank’s head office is located in Baghdad with four branches in Basrah, Mosul, Sulaimaniyah, and Erbil. However, currently the bank does not control the financial and
administrative affairs of Erbil.
and Sulaimaniyah branches, as these branches are technically reporting to the Baghdad headquarters