denotes premium content | Jan 6 2009 
Regular
posted 23 Feb 2005 in Volume 8 Issue 4
Omni Whittington Commentary, January 2005
Iraq – Paris Club Pricing Update
After the announcement of the Paris Club agreement on 20 November 2004, the first trading transactions involving Paris Club Iraq debt are now reported in the market. Pricing for such Paris Club debt is around 14% - 20%, depending amongst others on the principal amount and the past due interest involved. Several uncertainties remain for the buyers of such debt, the major one being the interest rate, which will be agreed with Iraq in the relevant bilateral agreement. Nevertheless, these pricing levels imply an attractive all-in yield of around 20% per annum. Supply of such Paris Club Iraq debt involves mostly the uninsured portions of ECA insured trade credits to Iraq, while demand comes mostly from hedge funds.
Georgia – Georgia in the lift?
Georgia has been estimated to owe its foreign creditors roughly $1.9bn, including approximately $525m in Paris Club debt. A large part of the remainder is owed to Russia and other former Soviet countries. Following the IMF’s approval of Georgia’s ambitious reform programme under the Poverty Reduction and Growth Facility on 4 June 2004, the Paris Club creditors agreed to a restructuring of $161m of Georgia’s external debt in arrears and maturities due through December 2006. The restructuring terms are extended Houston terms with the usual understanding that Georgia would seek rescheduling on comparable or better terms from non-Paris Club creditors. Only a small portion of the total debt is commercial, trade-related debt. Trading activity of Georgian trade debt has been very limited. As the improvement in economic fundamentals have brought down risk premia on government securities, it is fair to expect a limited upward trend in prices of defaulted sovereign trade debt.
For a pdf of prices click here
