Syrian Central Bank Governor Adib Mayaleh told Bloomberg that Syria will have “No Problem” selling five issues of new bonds totaling about $105m whose rate will be set independent of any markets and whose buyers are limited to banks operating in the country. Limited for a reason as you will see.
This is the first ever bond sale by the Assad regime. Publicly, Mr. Mayaleh said that Syria intends to use the funds for development purposes; “development” in Syria can also mean more fortified security apparatuses. I suspect a larger portion will be dedicated to choking the country, security-wise. They should be called: The Bonds of Tyranny.
Even for the casually informed individual, it is a well-known fact that bond ratings determine their market rates. The higher the risk, the higher the returns. There is a point at which too much risk makes the bond worthless. Because of a wretched economy and because any official rating recognized by banks worldwide must endure a deep audit of the Syrian economy, Syria has chosen to create its own market, its own customers, its own returns, on its own terms. Welcome to the Socialism Meets Tyranny.
Furthermore, no international banker or investor in “junk” bonds will even consider Syria’s offerings in a country whose budget deficit is almost 25% of its GDP. It’s like vaulting behind a suicide jumper to save him.
The bad news against the Syrian economy keeps piling-up with the announcement today of the new figures for a widening trade deficit standing at $4.9b for 2009, mostly from lower than expected oil exports. For 2010, there is almost a certainty that oil exports will decrease by even a larger percentage and that is why Syria wants to hurry and sell these exceptional bonds with varying maturity dates from 3-months to 5-years.
Syria is my native country and nothing would please me more to see its people prosper under the tutelage of a healthy economy run by people whose focus is on what benefits the country rather than on how to stay in power indefinitely. So, my criticism is one directed at the regime with its attempts at embracing capitalist tools in a purely socialist system and a tyranny to boot. I do not know whether I should laugh or cry. But in my heart, I cry most of the times for the curse of the Assads.
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