The Iranian government has authorized a decision to issue up to $1.12 billion worth of new sukuk securities to fund various projects in the current fiscal year.
According to Press TV, the decision signed off by Vice President Eshaq Jahangiri on Saturday allowed government departments and municipalities across Iran to issue up to 180 trillion rials of sukuk, the Islamic sharia-compliant bonds, for the purpose of finishing infrastructure projects until the end of the current calendar year in late March 2021.
Iran’s Interior Ministry would oversee issuance of around 80 trillion rials (nearly $500 million) worth of securities by municipalities and their subsidiary organizations, said the decree signed by Jahangiri.
It added ministries of oil, industries and energy would be allowed to issue 35 trillion rials (nearly $218 million) worth of sukuk for investment in major projects. Oil and gas projects would be prioritized in the plan and the Oil Ministry can issue the securities in foreign currencies, it said.
Government companies, which also include major oil and gas firms operating energy facilities, will be allowed to issue 65 trillion (over $400 million) rials of sukuk for projects that are justified from “technical, economic, financial and environmental” points of view, said the decree.
Issuing sukuk has become a popular tool for investment attraction in Iran especially at a time of a major boom in trade in the country’s stock markets.
Investors prefer the government-backed bonds mainly because of their high yields and the fact that they are concentrated in established industries like energy and mining.
Experts believe sukuk issuance can be key to efforts by the Iranian government to offset economic losses suffered from a series American sanctions imposed on the country’s direct sale of oil.