According to a report by HIBNA, the official news portal of Bank Maskan, the Ijarah bonds pertaining to the Saba Naft Construction Company (SNCC) were valued at 920 billion rials ($21.78 million) and released with an interest rate of 15%.
"In light of the fact that the interest rates of these bonds were equal to the annual bank deposit rates, Kaveh Delsouz, MIB's director of finance and advisory services, said after the bonds were offered in the official [over-the-counter] Farabourse, they were all snapped up in a short period of time," the report added.
The bonds were backed by assets belonging to company stakeholders, namely two pieces of land, MIB announced.
By releasing Ijarah bonds, according to Financial Tribune, MIB is responsible for underwriting and collecting the funds as the issuer of the bonds and the representative of bond purchasers. The bank purchased the two pieces of land from SNCC and will rent them again to stakeholders. It has also guaranteed the liquidation of bonds and will pay interests to purchasers once every three months.
SNCC belongs to the retirement fund of oil industry workers.
MIB chief executive, Mohsen Fazelian, discussed the bonds in a statement published on MIB's website. He said they are a positive development in that financing the housing sector through the capital market and not the banking system is a challenge since costs go higher.
However, since these bonds do not require bank guarantees as agreed by the Securities and Exchange Organization, they will end up cheaper than usual capital market finance tools.
"Either way, the establishment of credit rating institutions will surely clear many of the hurdles on the way of finance bonds in the capital market," he said.
Bank Maskan and MIB are subsidiaries of Bank Maskan Financial Group that has been increasingly tapping into the potentials of the capital market to finance housing projects in line with the broader policies of the government and the Ministry of Roads and Urban Development.
For instance, the group has been pursuing the establishment and expansion of real-estate investment trusts (REITs) as a new and alternative way for boosting the housing sector –that is currently in a boom phase following at least five years of recession.
The first-ever REIT, dubbed Nasim, was officially inaugurated by Roads Minister Abbas Akhoundi and the former head of Bank Maskan, Mohammad Hashem Botshekan, in December 2017.
Fazelian announced on June 2 that Narvan, the sector's second REIT, will fund its first real-estate project in the foreseeable future.
"This will be a new experience for other companies that want to operate in this area,” he had said at the time.
MIB, which began its activities about three years ago as a subsidiary of Bank Maskan, is the only specialized agency currently active in financing housing, urban development and transport projects.
$81m of Bank Maskan Loans in 2 Months
Bank Maskan also recently released its latest loan allocation performance report in the first two months of the current fiscal year that ended on May 21.
According to the head of the bank's Facilities Department, a total of 14,579 counts of loans in five categories of renovation and revitalization of rural homes, unexpected accidents' facilities, interest-free loans, facilities for distressed areas and loans for special strata were handed out to applicants.
"The total volume of loans was more than 3.43 trillion rials ($81.22 million) during this period," Neda Kermanshahi also said.
Loans aimed at revitalizing distressed urban areas are one of the most important priorities of the government and the Roads Ministry. According to the Bank Maskan official, 1,163 counts of loans worth more than 910 billion rials ($21.54 million) were allocated in this regard during the two months.
Kermanshahi also said 2,766 counts of loans worth more than 360 billion rials ($8.52 million) were allocated to applicants seeking to revitalize and renovate their rural homes during the period.