Iraq Debt Safer Than Ohio Banks

It turns out that as a result of surging oil profits and decreased violence in Iraq, the $2.7 billion of 5.8 percent Iraq bonds due in 2028 gained 45 percent since August 2007 (see Bloomberg article). Last year investors were pricing the debt at 7.26 percentage points higher than Treasuries. Now that yield spread is down to 4.84 percentage points. Currently, the spread is actually narrower than the higher yielding notes of KeyCorp and National City banks out of Ohio. High crude oil prices and the global credit crunch are continuing to shake-up the entire global landscape, forcing portfolio managers to reconsider nearly everything in their portfolio.