News ID: 260505
Published: 0336 GMT October 20, 2019

Iran to raise $870m in Islamic bonds to finance projects

Iran to raise $870m in Islamic bonds to finance projects

The Iranian government is planning to implement its largest financing scheme through the local stock market by issuing nearly $870 million in sukuk, or bonds compliant with the Islamic law.

In report, IRNA cited an official from the Securities and Exchange Organization of Iran (SEO) as saying that sukuk worth 100 trillion rials ($869.5 million) will be issued through a middle company working for Iran’s ministry of finance in the week beginning October 27, 2019.

Gholamreza Aboutorabi said the bonds will be exempt from normal registration procedures in the SEO, suggesting they will be easier for future trade, adding that Iran’s Plan and Budget Organization (PBO) will guarantee payment of the interest at a rate of at least 17.9 percent, as the rate is not fixed to comply with Islamic laws, and the principal of the debt certificates.

Aboutorabi said the interest for the sukuk, which have a maturity of three years, will be funded through the income derived from government taxation, adding that investors will receive their interest payments in six-month intervals.

The report said the planned debt issuance will be the largest ever carried out by the Iranian government.

It comes amid intensive efforts to continue to fund key development projects across Iran at a time sanctions imposed by the United States have affected government's normal revenues.

Issuance of sukuk also comes amid a historic boom in trade in Tehran Stock Exchange where major companies, especially those active in the oil and gas industry, are benefitting from a flow of capital from speculative markets like foreign currency and gold.

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