According to the head of Capital Market Central Asset Management Company, Gholamreza Abutorabi, the Securities and Exchange Organization has given the go-ahead to Iran Khodro Group to issue 7 trillion rials ($180 million) worth of Murabaha sukuk to finance the purchase of parts and materials required for auto manufacturing.
The exact date for the bond issue has not been announced yet. The securities will be offered on Tehran Stock Exchange, mature in four years and have a return rate of 18%.
The capital market’s last largest bond issue was by IKCO’s rival, SAIPA, in November 2016 when 5 trillion rials ($128.6 million) worth of sukuk were issued. Murabaha is an Islamic financing structure in which an intermediary buys a property with a free and clear title, according to Financial Tribune.
Similar in structure to a rent-to-own arrangement, the intermediary retains ownership of the property until the loan is paid in full.