| By Elliott Gotkine BBC News business reporter |
In a dealing room in the City of London, bond traders are getting very excited.
It's not every day that bonds - or debt - as exotic as Iraq's come onto the market.
Indeed, it's been more than 15 years since that happened.
But on 23 January this is all set to change.
As part of its ongoing attempts to wipe out the $125bn (£71bn) of debt it inherited from Saddam Hussein's regime, Iraq will issue $2.7bn of new bonds.
They are being given to about two-thirds of its commercial creditors, the remainder being either unreachable or having not been informed that the debt exchange was taking place.
In return, the creditors have agreed to forgive about 80% of the money they were owed.
Payback
For Baghdad, the move marks a major step towards financial rehabilitation.
For creditors, however, it doesn't sound like a great deal. Some have even complained.
But as one Iraqi banker told the BBC, most of these debts date back at least 12 years and will have long since been written off, at least on the companies' balance sheet.
Debt forgiveness by other countries is also gathering pace. Last November, the Paris Club of rich nations - which includes Britain, the US and Russia - agreed to write-off (in stages) a large chunk of the $40bn owed by Iraq to its members.
| It's about re-establishing Iraq's name in the market... a clean break from the past Haydar Al-Uzri, ex-head of Rafidain Bank |
Where that leaves Iraq right now can be a little confusing to work out.
But in practice, the bond move leaves Iraq carrying about $70bn to individual nations such as Romania and China.
And assuming Iraq keeps to the terms of a recent IMF agreement, it hopes to reduce those debts to about $33bn by 2010.
'Green light'
Despite the violence hampering recovery and rebuilding, Iraq may not find this target too difficult to meet.
Oil revenues, which were a little over $20bn in 2005, are expected to grow this year.
But why - when the country has so many other pressing problems - is it putting so much emphasis on debt reduction?
"Probably the most important thing is it will be the green light for institutional investors and foreign direct investors to start putting their money back into Iraq," says Peter Bartlett, managing director of Exotix, a bond trading house in London.
"Maybe we'll see two or three big international banks trying to get banking licences and open up offices in Baghdad as a result of this."
And Iraq desperately needs investment - and credit - to fund its reconstruction and repair its shattered economy.
Psychology
On top of this, however, there is the intangible effect of being back in the mainstream of global finance.
According to the former head of Rafidain bank - then Iraq's main bank and the one which subsequently racked up most of the country's debts - the bond issue is as important psychologically as it is financially.
"Really it's about re-establishing its name in the market," says Haydar Al-Uzri.
"It's a clean break from the past: being accepted in the international community. For a long time Iraq was a pariah for the whole world."
A successful debt swap could be seen as a vote of confidence in the country: a sign that better times lie ahead for its battered economy.
Bond traders will not see anything like this for some time to come.