Iraq restructures Saddam debt
Iraq has completed a ground-breaking debt exchange that will involve Iraqi risk being actively traded for the first time in emerging market indices. It's a $2.7 billion Eurobond to join emerging market indices, boosting liquidity.
|Central bank governor Sinan Al-Shabibi has overseen the restructuring process
About $14 billion of Saddam-era commercial debt was swapped into a $2.7 billion Eurobond that was issued in late January, after 100% of investors eligible to take part in the exchange accepted the invitation. Investors were given the option of receiving either the Eurobond notes or an interest in a multi-currency loan that has been sized at $175 million.
The new dollar-denominated notes mature in January 2028 and have a face value equivalent to 20% of what the companies were owed. The 80% haircut mirrors Iraq’s deal with its Paris Club creditors.
Iraq secured a 15-month IMF standby arrangement in late December, paving the way for the exchange.
The process began in 2004, when Iraq appointed Ernst & Young as reconciliation agents. The accountancy firm opened a website in connection with the claims in December 2004. A claimant forum was held in Dubai in May 2005, and terms for the cash tender and debt exchange were set out at the end of July.
The second half of the year saw the launch and subsequent settlement of two cash tenders, which had a participation and acceptance rate in excess of 70%.