By Hadeel Al Sayegh
DUBAI, Sept 8 (Reuters) - Iraq's government will start an investor roadshow on Thursday for its first international bond issue in nine years, according to banking sources, as it seeks to finance a budget deficit caused by low oil prices and its war against Islamic state militants.
Baghdad wants to raise up to $6 billion in a series of U.S. dollar bond sales, though the first issue is expected to be much smaller, sources familiar with the matter told Reuters.
Citigroup, Deutsche Bank and JP Morgan are lead managing the issue, and will start investor meetings in the United Kingdom and United States of America, lead arrangers said.
Despite the political risks in Iraq, its status as OPEC's second biggest oil producer is expected to ensure buyers for its debt; its huge southern oil fields have not been directly touched by the fighting, and it has embarked on an ambitious multi-year plan to raise crude output.
Baghdad is expected to pay a high price for its borrowing, however; Iraq's outstanding U.S. dollar bond maturing in 2028 is trading at a yield of 10.37 percent.
Ahead of this month's sale, Iraq obtained its first sovereign credit ratings; Standard & Poor's and Fitch rated it B-minus, six notches below investment grade.
The government has projected a budget deficit of about $25 billion this year, in a budget of some $100 billion. (Writing by Archana Narayanan, Editing by William Maclean)