Iran Gov’t to Sell $360m Sukuk Bonds

EghtesadOnline: The Ministry of Economy plans to sell Manfa’at Sukuk bonds worth 47 trillion rials ($361 million) on January 25 as part of financial measures to compensate budgetary needs in current fiscal year that ends in March.

News ID: ۷۸۵۳۰۵

25 January 2020

Manfa’at bonds will mature in 42 months and annual interest rate is 17.9%.  Interest will be paid every six months by the Central Securities Depository of Iran, the capital market’s clearing house, Financial Tribune reported.

The bonds are backed by the government’s future tax earnings as envisioned in the annual budgets and the treasury will be responsible for the settlement of the principal amount and interest thereof.

Among the main banks and investment companies in charge of subscribing the bonds are Qarz Al-Hasaneh Mehr Iran Bank, Parsian Lotus Investment Bank, Tamadon Investment Bank, Karafarin Bank and Bank Saderat Iran.

Manfa’at Sukuk is a type of Islamic financial instrument that 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 end-users to finance their operations.

In the current fiscal budget, government revenues from the sale of Islamic securities are projected at 400 trillion rials ($3 billion).

The figure is expected to rise to 800 trillion rials in the next fiscal year (March 2020-21) as per the budget bill submitted to parliament by President Hassan Rouhani in December.

This year’s budget deficit is projected between 1,000 trillion and 1,500 trillion rials ($8 billion-$12 billion) and is to be fixed partly by cutting general expenses and generate new revenues.