Iran: Participatory Bonds Generate $394m in 7 Months

EghtesadOnline: A report by the Central Bank of Iran shows that out of a total of 51 trillion rials ($504.9 million) worth of participatory bonds, 39.8 trillion rials ($394 million) were bought by investors in the first seven months of the current fiscal that started in March.

News ID: ۷۸۴۴۰۹

19 December 2018

Issuers were largely from the public sector including the government, which issued participatory bonds via the Economy Ministry to finance development projects.  Municipalities from Tehran, Isfahan, Mashhad, Ahvaz, and Qom also issued bonds to fund urban railroad infrastructure.

The provisional bond yields were 15% per annum for government bonds and 20% for municipality bonds with maximum four-year maturities.

Data show that by the end of October, government bonds amounted to 20 trillion rials ($198 million), equal to 39% of all issued bonds, 17.8 trillion rials ($176 million) of which were bought, Financial Tribune reported.

Participatory bonds issued by municipalities amounted to 31 trillion rials ($306.9m) in the same period that accounts for about 60% of all bonds. Of this amount, 21.9 trillion rials ($217 billion) were sold to buyers.

The CBI said bonds are issued by municipalities mainly to complete urban railroad projects as recommended in the 2016-17 budget.

TM Leads the Pack

Tehran Municipality had the lion's share of bonds worth 7 trillion rials ($69.3 million) and 6 trillion rials ($59.4 million) for two of its subway lines (7 and 6).

TM Bonds for Line 7 which were issued at the start of the new fiscal year were sold in their entirety. However,  bonds issued for Line 6 had no buyers, probably due to the fact that they were issued in September and close to the time when the report was concluded (late October).

Isfahan Municipality issued bonds worth 5 trillion rials ($49.5 million) at the turn of the previous year to finance the first phase of its Line 2 urban railroad. According to reports, the bonds were well received and fetched 49.9 trillion rials ($49.4m) -- one percent shy of the total.

Mashhad Municipality issued 4 trillion rials ($39.6 million) in the first six months of the fiscal year and 3 trillion rials ($29.7 million) worth of bonds in the first seven months of the year to complete two phases of the urban railroad in the shrine city that attracts millions of pilgrims from across the world every year. These bonds also turned out to be attractive for investors.

Qom Municipality issued bonds worth 3 trillion rials to finance the first phase of its Line 1 subway and sold 2.9 trillion rials ($29.6 million) by the end of October.

Bonds issued by Ahvaz Municipality to finance the southern oil city’s subway project reportedly did not have buyers.