An Unprecedented Rally - Iraq - US$ Global 2028 Bond (yield, %)
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We also retain our bullish outlook towards the Iraqi US$ Global 2028, which has continued to trade upwards in the last few months. The bond is now yielding 8.9% - a two-year high - down from the 11.7% it was offering when we first became bullish in August 2007. On a technical basis, multi-month support remains intact and the instrument is now pushing towards key resistance at 8.6% which if broken, would presage further gains towards the next key level of 8.4%. In recent months, the government's decision to ignore the controversial oil revenue sharing law, and a continued rise in oil production, have boosted the Iraqi economy and we are forecasting real GDP growth of 10.6% in 2008. On top of this, recent political developments, such as the announcement of provincial elections for October 1, have buoyed out bullish outlook for the bond. Although key security risks remain - the number of Iraqi civilians killed in February rose to an estimated 660, up from 460 deaths in the previous month - the level of violence is far lower than in previous years: for example around 1800 civilians were killed in February 2006 alone.
Source: BMI (07/03/08)
