Iraqi Bonds Draw Interest from Wall Street Investors

The Wall Street Journal reports (Friday, March 17, 2006) that emerging market mutual funds are snapping up risky bonds issued by the Iraqi government earlier this year. The bonds were originally issued to banks - such as Citigroup and JP Morgan Chase - to refinance commercial debt accumulated under Saddam. The Banks began selling the bonds (about $2.8 billion in total) to investors in January.

The implications for Iraqi Dinar are not discussed in the article, but it is clear that some serious Wall Street investors believe Iraq may indeed have a bright future.

If things go right, Iraq could be a very wealthy country, say both Mr. Peta of Standish Mellon and Mike Cornelius, portfolio manager of Emerging Market Bond Fund at T.Rowe Price. They believe that if Iraq stabilizes, the country will have more than enough in oil revenue to meet its debt obligations from its 115 million barrels of proven reserves,the third largest in the world behind Saudi Arabia and Iran.