2nd Batch of Iran's Manfa’ah Sukuk Issued

EghtesadOnline: The second batch of the new Islamic debt security Manfa’ah sukuk valued at 20 trillion rials ($416.6 million) was offered on over-the-counter exchange Iran Fara Bourse on Saturday.

News ID: ۷۸۲۱۶۰

18 March 2018

The 42-month bonds bear an 18% interest and are priced at 1 million rials ($22.2) each. The government bonds are meant to finance buyback of bonds that have matured in the current fiscal year (March 21, 2017-18).

The buyback of Manfa’ah sukuk’s second batch will be backed by 21% and 59% of government revenues sourced from state-exclusive profits in National Iranian Gas Company and Central Bank of Iran, ILNA reported.

Minimum bond purchase is at 100 and the cap is unlimited for non-institutional buyers. The purchase window will close on Sunday, according to Financial Tribune.

Manfa’ah or usufruct sukuk are valuable financial deeds that are indicative of the ownership of the holder on a certain service or future profits of a durable asset.

Essentially, Manfa’ah is a derivative of Ijarah sukuk. The issuer divides its right of use of an identifiable asset over a predetermined period of time into specific units and transfers these rights to sukuk holders. The sukuk will be backed not by the issuer but rather by the asset or the cash flow generated from the asset.

The government issued the first batch of Manfa’ah sukuk on Tuesday amounting to 30 trillion rials (about $670 million) with a maximum of 20.1% annual interest and backed by 100% of government revenues in the National Iranian Oil Refining & Distribution Company, Telecommunications Infrastructure Company and 78% in National Iranian Gas Company, the head of Capital Market Central Asset Management Company, Gholamreza Aboutorabi, said.

For the past two months, bond issuance in the debt market has broken all previous records in terms of volume. It has grown 30% year-on-year during Dec. 22-March 14 to an unprecedented level of 80 trillion rials ($1.66 billion), according to the Persian economic daily Donya-e-Eqtesad.