Mubasher: Moody's Investors Service has assigned a Caa1 long-term issuer rating to the government of Iraq, with a stable outlook, according to a recent report issued on Friday.
Moody's has also assigned a Caa1 senior unsecured rating to the country's bond issuance. The rating was initiated by Moody's Investors Service and was not requested by the rated entity, the report noted.
“Concurrently, Moody's has assigned B3 long-term local currency and foreign currency bond ceilings. It has also assigned Caa2 long-term local currency and foreign currency deposit ceilings,” it further added.
The ratings agency attributed the Caa1 rating to four key factors, namely, the relatively large Iraqi economy that is endowed with very substantial oil wealth, but which suffers from highly volatile growth due to its lack of economic diversification, and the country's institutional strength is very low, as reflected in its weak governance indicators and transparency.
The third factor is that Iraq has moderate fiscal fundamentals, with a debt burden that is expected to stabilise at around 60% of GDP, but with an overwhelming dependence on oil revenues, while the fourth and final factor was Iraq’s susceptibility to event risk is very high, against the backdrop of some of the highest political risks.
