Iraq sells $2.1 Billion bonds to fund power deals!

[gankans]

Iraq sells $2.1 bln bonds to fund power deals

BAGHDAD, March 17 (Reuters) - Iraq has raised $2.1 billion from local banks via a reopened one-year treasury bond issue to fund electricity projects, the country's finance minister said on Wednesday.

Iraq issued the second tranche last week after it sold a first tranche worth around $3 billion at the end of last year, Bayan Jabor said.

"We issued the treasury bonds... to fund the electricity ministry," Jabor told reporters.

In 2008, Iraq signed multi-billion dollar deals with General Electric (GE.N) and Siemens (SIEGn.DE) to add nearly 9,000 megawatts of capacity over the next few years.

Iraq has scrambled for ways to finance the purchase after a plunge in oil prices in 2008 deprived it of revenues and forced it to slash its 2009 budget three times.

Local banks bought into the bonds by using cash from their reserve requirements to lend the Finance Ministry, at a rate of 2 percent, Mudher Kasim, a senior central bank adviser said.

"These are treasury bonds but ... they were not auctioned. They are special issuances," Kasim said.

Seven years after the U.S.-led invasion, Iraq's national grid still only supplies a few hours of power each day. Intermittent electricity is one most Iraqis' main complaints.

Iraq's current electricity capacity is 7,500 megawatts, far short of the country's requirement of 12,000 megawatts.

(Reporting by Aseel Kami; Editing by Rania El Gamal, John Stonestreet)

Analysis:

This is significant becasue they are pulling all the right strings to execute this RV and this is just one of those support mechanism for the coutnry to reassure that they are continuing to support their banking institutions and local businesses and infrascture as they have said they would.

http://uk.reuters.com/article/idUKLDE62G1ZB20100317

[dazzleu]

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[IcemanSC]

Thanks for the post.