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NIOC Selling Sukuk to Finance Operations

NIOC Selling Sukuk  to Finance OperationsNIOC Selling Sukuk  to Finance Operations

The National Iranian Oil Company will sell bonds to finance its projects, said its chief executive on Tuesday.

To finance expansion plans in the oil industry, 50 trillion rials ($1.7 billion at official rates) Mosharekat sukuk – Islamic bonds – will be sold via the banking system from June 22, said Rokn-Aldin Javadi.

Javadi said issuing Mosharekat sukuk is one of the ways to finance NIOC's projects, and the funding amount was ratified in the government annual budget under the "construction budget" section.

"The sukuk will finance oil projects across Iran, with southern oilfields and South Pars oil field being the priority," said the chief executive.

Javadi said the company planned to issue bonds in the last Iranian year (ended March 20), but the company was banned to do so since it had not fulfilled all its previous debt obligations.

Innovative Financing

The NIOC has also started financing its operations through capital markets by selling a form of oil futures in the Iran Energy Exchange.

The NIOC planned to raise three trillion rials through sale of Mazut Salaf securities in six-500-billion rial batches. The two first batches were bought by 172 investors – institutional and non-institutional. The NIOC is waiting for Securities and Exchange Organization to allow further sales.

The securities' bare 23 percent interest is calculated on a daily basis. The NIOC has guaranteed paying 25 percent interest at their maturity, which is 12 months. Furthermore, their return may rise further, but the NIOC can exercise its call option at 28 percent.

 

Financialtribune.com