Bonds were offered in the Modern Financial Instrument Market of the junior stock market Iran Fara Bourse, according to the IFB website.
With interest at 17.9%, the Manfa’at bonds mature in 36 months. Interest will be paid every six months by the Central Securities Depository of Iran, the capital market’s clearing house.
The bonds are backed by the government’s future tax earnings as outlined in annual budgets and the treasury will be responsible for settlement of the principal and interest thereof, Financial Tribune reported.
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.
Sunday’s bond sale was the third of its kind. During the past two offers the government sold bonds worth 100 trillion rials to reduce its budgetary constraints.
In the current fiscal budget, government revenues from the sale of a variety of Islamic securities are projected at 400 trillion rials.
The figure is expected to rise to 800 trillion rials in the next fiscal year (March 2020-21) as per the budget bill President Hassan Rouhani presented to the Majlis on Sunday.
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 improving ways to generate new revenues.