Financial services company Standard & Poor’s (S&P) issued a credit rating for Iraq for the first time on Thursday, giving the country a junk score. S&P gave Iraq a B-foreign currency rating, citing the the country’s ongoing war with the Islamic State (ISIS or ISIL) and a steep slide in oil prices as significant risks to investors. S&P qualified its warnings by noting that Iraq “benefits from massive oil reserves and high oil exports,” although the country is facing “significant and external pressures.” Ratings agency Fitch also issued its first credit rating to Iraq last month. Fitch also gave Iraq a B-. The B- rating is an indication that Iraq’s 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. [AFP, FT, 9/4/2015]
Saudi Aramco trims some crude-oil prices to Asia, United States
Saudi Arabia has cut the official selling price for its light, medium and heavy crude oil grades in October to Asian customers. State-owned oil company Saudi Aramco said in an emailed statement Thursday that light and heavy grades had been cut by 60 cents, while medium grade had been cut by 50 cents. The statement also noted that Aramco had reduced the price of all its grades to the US. According to Bloomberg, Saudi Arabia reduced crude production in August to 10.5 million barrels per day, marking the first decline this year. [WSJ, Bloomberg, 9/3/2015]
Libya plans to sell tanker used in attempt to export oil
Libya plans to sell a tanker that a former rebel group used in an attempt to bypass the Libyan government and export oil on its own last year, the Tripoli-based state prosecutor said on Thursday. The group had loaded crude on the “Morning Glory” at the eastern port of Es Sider and sailed in March 2014 before US Navy SEALs stopped the tanker and returned it to Tripoli. Libya briefly detained the tanker’s foreign crew, then deported them. Officials never disclosed who had planned to buy the crude loaded on the tanker. An auction is scheduled for next Thursday.[Reuters, 9/3/2015]
Yuan effect chokes Egypt as trades signal pound peg too high
Traders are convinced Egypt will not resist the pressure to weaken the pound for long. The black market for dollars on Cairo’s streets has reemerged for the first time since April, signaling that investors and businesses are betting the pound’s official rate of 7.83 per dollar no longer represents its true value. Egypt may follow nations such as Kazakhstan and Vietnam that were forced to depreciate their currencies after China’s yuan devaluation on August 11. Egypt weakened its currency peg twice in 2015, most recently in July. The country cannot afford the loss of export competitiveness as it seeks to boost foreign-exchange holdings that have barely recovered since 2011. The Central Bank’s decision to keep the pound’s dollar peg steady risks exacerbating an already widening trade deficit and turning away foreign investment. [Bloomberg, 9/3/2015]
Also of interest
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