44855
Iran to Issue Bonds Worth $13b
Economy, Business And Markets

Iran to Issue Bonds Worth $13b

Minister of Economy Ali Tayyebnia said on Sunday the government plans to issue 400 trillion rials ($13 billion) worth of bonds in the current fiscal year that ends in March 2017. The bonds will be issued to help repay government debt to the private sector.
In a ceremony to launch the new mortgaged-back securities (MBS) attended by the governor of the Central Bank of Iran and the minister of roads and urban development, Tayyebnia said although the country's ratio of debt to GDP is not high comparable with other countries, the current "messy" conditions must be addressed.
"We intend to replace government debt to people with bonds whose yields will be paid every three months," he said adding that the request to launch a debt market will be sent to the Majlis soon.  
Mohammad Hashem Botshekan, the CEO of Bank Maskan (housing bank) also announced that 100 trillion rials ($3.25 billion) worth of MBS will be issued by the end of the current fiscal year.
Noting that Bank Maskan has paid 122 trillion rials ($3.97 billion) in the form of loans, Botshekan said it is "one of the inherent duties of any bank" to increase its lending power. As reported by Tasnim News Agency on Sunday, he also announced that for the first time, the state-owned lender he leads has provided 3 trillion rials ($97 million) worth of MBSs with a yield of 18.5%.
A mortgage-backed security is a type of asset-backed security that is secured by a mortgage or collection of mortgages. An MBS is a way for a bank to lend mortgages to its customers without having to worry about whether the customers have the assets to cover the loan. Instead, the bank acts as a middleman between the home buyer and the investment markets.
This is the first time that MBS are being offered in Iran after they were approved as being Sharia-compliant by the Exchange and Securities Fiqh Council. The instruments are hoped to help move the recession-hit housing market by providing banks with more assets to provide home loans.     
"It has been decided to offer 100 trillion rials worth of securities in the current fiscal year and in the second phase, more securities amounting to 10 trillion rials will be offered by Maskan," he said.
He concluded by mentioning that the securities have a two-year maturity with interests being paid every three months.

Key Link
If interest rates of the securities are in sync with the realities of the economy, said the head of the CBI at the ceremony, it would guarantee their success. Seif also named "imbalanced interest rates" as one of the tell-tale signs of a weak and struggling economy.
The senior official said the development of financial instruments in successful countries is the fruit of a link between the money and capital markets.
"Short-term resources in the money market will go to immediate needs of businesses and long-term resources will be directed toward the capital or stocks."
Considering the fact that ours is a "bank-based economy", he said the only way to develop and expand the financial system is to reinforce and empower the financial instruments of the capital market. Seif also noted that many experts' meetings were held to create the conditions necessary for the MBS.
Seif called the 18.5% yield on the MBSs "a suitable interest rate", announcing that the instruments were sold out "in the early hours  after they were offered" in Iran's Fara Bourse market.
The CBI chief also noted that the housing sector has the least amount of non-performing loans (NPLs) and "it has been guaranteed that the original amount and the yields of these securities will be repatriated  to investors."

Housing Development
The Minister of Roads and Urban Development Abbas Akhoundi spoke of the future of the housing sector and ways to improve it in the long term.
Calling the housing sector a complicated field that needs a variety of entities, Akhoundi drew attention toward his own plan of creating 18 new institutions, emphasizing that a number of the institutions have already been formed within the Money and Credit Council. "But some of them have yet to be formed, one of which will manage public assets. Through this entity, MBS can be cashed in."
Reviving the Home Savings Accounts, insuring advance purchasing of homes against risks and the establishment of small funds to renovate the distress urban areas were among his other propositions.
Akhoundi also said it is necessary to increase the capital of banks. Noting that the minimum capital of the banks has been set at 4 trillion rials ($130 million) in the past five years – "which is currently worth no more than $100 million.
"The banks need a substantial minimum capital, which at least needs to be around one billion dollars in the post-sanctions era," he said.

Short URL : http://goo.gl/5wbHvC
  1. http://goo.gl/DUAZ6w
  • http://goo.gl/SCsvZh
  • http://goo.gl/Uutbmu
  • http://goo.gl/qsmoVH
  • http://goo.gl/vGYuN7

You can also read ...

Big Benefits of a German ‘Iran Bank’
Since US President Donald Trump pulled out of the nuclear...
Islamic Bonds Worth $25m Issued for  Locomotive Manufacturing
Some 1.05 trillion rials ($25 million) worth of Islamic bonds...
Audi Names New Leader After CEO Arrested
Audi has tapped its top sales executive to lead the company...
Structural Reforms in Banks  to Help Ensure Fiscal Stability
The second and final day of the Conference on Monetary and...
Hyundai Elantra
After local media reported that the South Korean carmaker...
Two-Month Auto Parts Import Bill: $468m
Iran’s auto parts import bill for the first two months of the...
Kerman to Host 2 Int’l Mining Expos Next Week
The Sixth International Exhibition of Mining, Mineral...
IRIR Unveils Suburban Rail Expansion Plans
The Islamic Republic of Iran Railways plans to expand suburban...

Trending

Googleplus