Iran to sell $500m foreign-currency-denominated bonds in 2016

Iran’s Central Bank (CBI) plans to offer $500 million in foreign-currency-denominated bonds to international investors next year as the country prepares to prop up its economy after sanctions are lifted.

“I think in 2016 we have to pull the trigger…We have to test the market outside Iran,” Iran’s deputy minister of economy and finance, Mohammad Khazaee, was quoted by The Wall Street Journal as saying.

He said that the planned bond sale would serve as a yardstick to measure interest in Iranian debt as the Islamic Republic prepares to attract foreign investment to boost its economy after years of unjust sanctions.

Mohammad Fatanat, the head of Securities and Exchange Organization, also said that Iranian officials are planning to set up currency-hedging instruments via a futures market for foreign investors who fear fluctuations in the value of Iran’s legal tender are likely to hurt their returns.

In 2002, Iran sold 1 billion euros worth of euro-denominated bonds, which was the country’s first and last foreign bond issuance since the 1979 Islamic Revolution.

Since President Hassan Rouhani took office in 2013, Iran has managed to slash a runaway inflation rate and stabilize the value of the rial.

Economists say Iran’s population of 80 million and gross domestic product (GDP) of $400 billion make the country one of the few large markets remaining untapped by global investors.

Iran’s July landmark nuclear deal with six world powers and the expected sanctions relief are motivating foreign investors to seek chances in the country.

 

Islamic treasury bills

In September, Iran issued its first Islamic treasury bills in a bid to provide stimulus for its market and bring it out of stagnation.

The country issued at least 400,000 notes worth 400 billion rials ($12.4 million) with maturity date of March 3, 2016 on off-exchange market for securities and other financial instruments.

The building of the Central Bank of Iran in Tehran

The move was aimed to attract stranded assets and repay its debts to contractors.

The government is also said to owe more than $30 billion to Iranian banks, which has left financial institutions with a credit crunch.

The effective interest rate of the bills is expected to be higher than the official bank deposit which stands at 20%.

By Press TV