Iraq government given “junk” rating

Ratings agency Moody’s has given the government of Iraq a long-term issuer rating of Caa1 – a score associated with “substantial risks” – as it warns the country faces highly volatile growth.

The rating puts the Iraqi government well inside the non-investment-grade category, which are commonly known as high-yield or “junk” bonds.

“Iraq’s susceptibility to event risk is very high, against the backdrop of some of the highest political risks in Moody’s rated universe,” warned the agency.

Moody’s added that Iraq’s “institutional strength”, a measure of legal and political stability, is very low, which is reflected in weak indicators for governance and transparency.

The agency predicts the Iraqi economy will contract by 0.4% this year as a result of a slowdown in the oil industry.

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