S&P rates Iraq for first time

American financial service company Standard & Poor's issued war-torn Iraq a credit rating for the first time Thursday, with the country's conflict with Islamic State militants and low oil prices giving it a junk score.

Iraq has been plagued by war and violence since the 2003 US invasion that toppled Saddam Hussein. Currently violent jihadists have taken over large parts of the country, something Standard & Poor's took into account when it handed out its B- rating.

The country "Iraq faces security and institutional risks that are among the highest of all rated sovereigns -- stemming primarily from its war with ISIS," the agency said in a press release using another acronym for IS.

S&P said in the statement that the country faces sectarian division between Shiites, Sunnis and Kurds and has "significant fiscal and external pressures."

Those pressures stem partly from a global decline in oil prices, which have lost more than half their value since last year due to a glut of oil on the market.

S&P qualified its warnings by noting that Iraq "benefits from massive oil reserves and high oil exports."

Rating agency Fitch also issued its first credit rating to Iraq last month, another B-.

Fitch noted the country's lack of control of three provinces and tense relations with the Kurdish regional government.

The B- is a non-investment grade, or a speculative rating, which means many investment funds are not allow allowed to purchase such "junk" bonds.

The B- rating is an indication the bonds may only have a small assurance of interest and principal payments over a long time, and is just one step above rating levels warning that a country is vulnerable to default on its bonds.
Source: AFP