St. Louis customers and employees of National City Bank may be surprised to learn that the bond market considers the bank’s parent company to be a worse risk than the government of Iraq. Bloomberg makes the comparison in a story on Iraq’s improved finances:

The country’s $2.7 billion of 5.8 percent bonds due 2028 gained 45 percent since August 2007, according to Merrill Lynch & Co. indexes. Investors demand 4.84 percentage points more in yield to own the debt instead of Treasuries, down from 7.26 percentage points a year ago. The spread is narrower than for notes of Ohio banks National City Corp. and KeyCorp, suggesting Baghdad may be safer for bond investors than Cleveland.

In Iraq’s case, the market is focused on the amount of oil it has in the ground. In the banks’ case, the focus is on much less attractive assets, like subprime mortgages and foreclosed houses.