The current fiscal year (started March 21) will see the issuance of 12 batches of corporate bonds totally valued over 30 trillion rials ($714.28 million), the managing director of Capital Market Central Asset Management Company said.
"The funds raised via these debt securities will be invested in a wide range of sectors, including pharmaceuticals, auto production, aviation, oil, steel, communications and railroads," Gholamreza Aboutorabi was also quoted as saying by the organization's public relations.
The largest batch to be issued this year belongs to the Telecommunications Company of Iran, worth 8 trillion rials ($190.4 million) of Ijarah sukuk.
This is in fact the largest corporate bond issuance in the Iranian capital market's history, surpassing Iran Khodro's 7 trillion rials ($166.6 million) of Murabaha sukuk issued in the last fiscal year (ended March 21, 2018).
"TCI's four-year bonds will have a 16% yield to maturity with interest paid every three months," the deputy head of Lotus Investment Bank, Abolfazl Shahrabadi, said.
"Next in line in terms of value is the flagship carrier Iran Air, which is slated to issue 5 trillion rials ($119.04 million) of Ijarah sukuk. The money raised will be used to purchase 12 new Airbus planes," said Aboutorabi.
Maskan Investment Bank will undertake the 16% year-to-maturity five-year bonds underwriting and market making, according to Sukuk.ir, and Bank Maskan, Parsian Bank and Bank of Industry & Mine will guarantee the buyback.
Sirjan Iranian Steel Company, a subsidiary of Middle East Mines & Mineral Industries Development Holding Company, also plans to issue 4 trillion rials ($95.2 million) of four-year Ijarah sukuk with a 16% YTM. The money raised will be used to finance incomplete expansion projects and boost SISCO's capital.
Next is Iran's second largest automaker SAIPA, set to raise 3.9 trillion rials ($92.8 million) through the issuance of four-year Ijarah sukuk with 16% YTM. Bank Mellat will guarantee the buyback and Mellat Investment Bank will be its underwriter and market maker.
The rest include two of MIDHCO's other subsidiaries, namely Butia Iranian Steel Company and Babak Iranian Copper Company, as well as Mahan Air, Alborz Niroo Fleet and Equipment Company, Koroush Food Industry, Tejarat Koushesh Sepahan Company, Adorateb Company and Saba Naft Engineering and Construction Company.
> Ijarah: The Corporate Favorite
Ijarah sukuk are evidently corporates' Islamic bonds of choice. They are securities representing the ownership of well-defined assets tied up to a lease contract, the rent for which is the return payable to sukuk holders.
Still, other types such as Manfa'ah, Murabaha and Istisna' have their place for some of the last companies named.
Manfa’ah or usufruct sukuk are valuable financial deeds that are indicative of the ownership of the holder on a certain service or future profits of a durable asset.
Essentially, Manfa’ah is a derivative of Ijarah sukuk. The issuer divides its right of use of an identifiable asset over a predetermined period of time into specific units and transfers these rights to sukuk holders. The sukuk will be backed not by the issuer but rather by the asset or the cash flow generated from the asset.
Murabaha sukuk, on the other hand, are certificates of equal value issued for financing the purchase of goods based on Murabaha contract. Sukuk holders become the owners of the underlying goods. These sukuk are typically issued by the seller of the Murabaha goods, while the subscribers are the buyers of those goods
And Istisna' sukuk are certificates of equal value that are issued for the purpose of raising funds to be used in the production of goods. Once produced, the products' ownership is transferred to sukuk holders who become entitled to the sale price of sukuk or the underlying product.
