Republic of Iraq Assigned 'B-/B' Foreign And Local Currency Sovereign Ratings; Outlook Is Stable; 130th Rated Sovereign

OVERVIEW In our view, Iraq faces security and institutional risks that are among the highest of all rated sovereigns--stemming primarily from its war with ISIS--as well as significant fiscal and external pressures due to the sharp fall in oil prices in the second half of last year. However, Iraq benefits from massive oil reserves and high oil exports. Projected large increases in oil production will, in our view, support economic growth and help alleviate fiscal and external pressures over the medium term. We are assigning our 'B-/B' long- and short-term foreign and local currency sovereign credit ratings to Iraq. The stable outlook is premised on our expectation that fiscal and external deficits will not worsen beyond our forecasts and that

...Standard & Poor's analysis of sovereign creditworthiness rests on its assessment and scoring of five key rating factors: (i) institutional assessment; (ii) economic assessment; (iii) external assessment; (iv) the average of fiscal flexibility and performance, and debt burden; and (v) monetary assessment. Each of the factors is assessed on a continuum spanning from 1 (strongest) to 6 (weakest). Section V.B of Standard & Poor's "Sovereign Rating Methodology," published on Dec. 23, 2014, summarizes how the various factors are combined to derive the sovereign foreign currency rating, while section V.C details how the scores are derived. The ratings score snapshot summarizes whether we consider that the individual rating factors listed in our methodology constitute a strength or a weakness to the sovereign credit profile, or whether we consider them to be neutral. The concepts of "strength", "neutral", or "weakness" are absolute, rather than in relation to sovereigns in a given rating category....

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