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21 Sep 2007

Babylon Admitted To Participate in Iraqi Central Bank T-Bill Auction

Iraqi hedge fund `The Babylon Fund´ announced that today, as the first foreigners, they were admitted by the Iraqi Central Bank to participate in the primary auction of Iraqi-dinar denominated 6 month and 12 month T-bills.

The investment case for T-bills: Annual net yields are running at approx 18% for 6 month T-bills, and the exchange rate is consistently appreciating against the USD via a managed float regime.

The inflation rate is also now quickly falling down from extreme levels. In January it was running at 50%+ , but YTD it's now down to 5%.

Babylon's winning streak continued during July and August, with a rise of 3,8% in the Babylon Fund's NAV-price.

Of the hedge fund's direct Iraqi holdings, bond yields steered higher upon a combination of dried-up flow and risk aversion factors partly based upon the perceived weakened state of the government whose success might be seen as being indirectly linked to the bond payment stream.

On the other hand, in the ISX stock market in Baghdad, prices rose strongly, as did value and volumes traded, as participants positioned themselves ahead of foreigners' entrance into the ISX, which was allowed as of 1st of August.

According to a statement, Babylon's aim is to provide long-term capital growth from an investment portfolio consisting of Iraqi and Iraqi-dependent securities. The investment process is mainly top-down driven, with a mix of fundamental analysis and portfolio diversification characteristics, aiming to be regarded as an easy, safe and efficient Gateway towards investing into the region.

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