NIOC Selling $154m in Manfa’at Bonds

EghtesadOnline: CEO of the National Iranian Oil Company said Tuesday the state company will offer 20 trillion rials ($154 million) worth of Manfa’at bonds in two stages on March 13 and 16 on Iran Fara Bourse (junior stock market for securities and other financial instruments in Tehran).

News ID: ۷۴۶۹۱۸

13 March 2019

The announcement, published on the NIOC website, said the money will be used to pay for maintenance of oil production capacity and raise production.

"Bonds will be offered as part of NIOC plans to sell a total of 30 trillion rials Manfa’at bonds by the end of current fiscal (March 20).  NIOC offered 10 trillion rials ($77 million) worth of bonds on IFB during the month to February 20. By offering the remaining 20 trillion rials the company will have entirely realized its goals,"  Masoud Karbasian said.

Bonds will be issued by Saba Arvand Oil and Gas Development Company and guaranteed by NIOC. The bonds mature in three years and the nominal yield is 19% annually. Interest on bonds should be paid every six months, according to Financial Tribune.

Manfa’at is a security which states ownership of a certain service or future profit of a lasting commodity transferred for a certain price. The security can help meet businesses’ immediate needs for liquidity with no access to an end-user to finance operations.

The parliament last month approved part of the budget bill which allows the Oil Ministry to issue up to $3 billion in Islamic bonds in the next fiscal that starts in March 21.

The bonds approved in the budget law are to be issued to repay the principal amount plus interest on the ministry’s previously matured bonds, reimburse matured loans, and settle debts to contractors of upstream oil and gas projects. The budget stipulates that the ministry may issue Islamic bonds through affiliated public companies.

In addition, the Majlis allowed another 35 trillion ($275 million) rials worth of Islamic bonds to be issued jointly by the oil sector, the industries and energy ministries for developing the ministry’ joint oil and gas fields and implementing the industries and energy ministries’ development and infrastructure projects.

The affiliated companies are obliged to settle the principal and interest on the bonds from earnings of the financed projects.

Karbasian said apart from the Manfa’at bonds, NIOC  intends to offer other financial instruments for financing gas and oil projects in the next fiscal.

“Given the capacity of the capital market and popularity of this financial instrument, it is anticipated that NIOC continue offering bonds on the stock market,” he said.

In order to ward off the impact of US economic sanctions that have particularly targeted Iran’s oil industry, the NIOC is determined to pursue projects linked to enhancing oil production, the NIOC website wrote.

“Aiming to use domestic capacities, create jobs and prevent recession in the oil industry, NIOC intends to use domestic financial instruments to curb dependence on foreign finance.”