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Borrowers Look Overseas as Sanctions Fade

Borrowers Look Overseas  as Sanctions FadeBorrowers Look Overseas  as Sanctions Fade

Iranian companies starved of foreign currency are planning sales of dollar-denominated sukuk as soon as sanctions are lifted, Bloomberg reported on Wednesday.

About 180 companies are considering Islamic bond sales in 2016 after a decade of western, according to Hossein Saeedi, a senior financial analyst at the corporate finance division of Tehran-based Amin Investment Bank, which has $1 billion under management.

The companies have “already started planning to design specific financial instruments to attract foreign investors to come to the Iranian market,” Saeedi, who says he’s been in talks with some of them, said. “If the sanctions are lifted, they are looking for aggressive sukuk financing.”

Iran is home to the world’s biggest Islamic banking industry, with assets estimated at $482 billion, more than Saudi Arabia, Malaysia and the United Arab Emirates combined, according to Dubai government data. A landmark deal reached between Tehran and world powers earlier this month left three more months to negotiate the details, including a timetable to end the western measures, imposed over the nation’s nuclear energy program, that have affected its economy.

Looking to Borrow

Oil sanctions have cost Iran more than $200 billion in lost exports since 2012, Adam Szubin, a senior US Treasury official, said last month.

US and European Union sanctions restrict Iran’s oil exports and isolate its banks from the global financial system.

“If financial sanctions are lifted, there will be high demand for any type of US-dollar issuance from Iranian companies as the trajectory of the country will shift dramatically and there are tremendous growth prospects,” Emad Mostaque, a London-based strategist at research company Ecstrat Ltd., said by e-mail on Monday.

 Dark Past

Market instability and currency fluctuation have been among the impediments to growth of Islamic finance in Iran, according to Abu Dhabi-based Amir Kordvani, an associate at law firm Clyde & Co, said by e-mail on April 27.

The rial has depreciated about 60 percent against the dollar since the end of 2011. It was at 33,340 rials in Tehran's foreign exchange market on Wednesday.

Companies keen to sell dollar sukuk are in industries ranging from petrochemicals to communications, Amin Bank’s Saeedi said.

“We plan to be ready as soon as the sanctions are lifted,” Saeedi said. “The demand is here and it’s really large.”

 

Financialtribune.com