Iran’s Bank Mellat to issue first euro-denominated Murabaha bonds worth $200mn

By bne IntelliNews November 1, 2023

Bank Mellat, one of the largest banks in Iran, will issue $200mn worth of Murabaha bonds in foreign currency next week,  the banks’ website quoted Reza Dolatabadi, the CEO, as saying on November 1. 

The bonds are one of the new foreign currency instruments introduced by the Central Bank of Iran (CBI) with the aim of strengthening fixed capital formation and securing foreign currency resources to complete national projects with high-profit potential.

The bonds are securities that show that the bondholder is the owner and creditor of a debt that comes from a Murabaha agreement. Murabaha, also referred to as cost-plus financing, is an Islamic financing structure wherein the seller and buyer mutually agree on the cost and markup of an asset. The markup replaces the interest.

The bonds will be issued via the Iran Currency Exchange (ICE) and will have a maturity period of one to four years. The interest rates will be denominated in euros and range from 5-5.5% annually. 

This is the first time euro-denominated Murabaha bonds are being issued in Iran.

The issuance of these bonds is strictly authorized only by entities holding a permit from the CBI's Foreign Exchange Commission.

“The new bonds will help us direct a considerable portion of foreign currency funds kept by exchange shops or companies towards the production sector,” Dolatabadi said. 

ICE was launched by the CBI in February 2023, amid fluctuations in foreign exchange rates. The CBI has been working to promote the ICE as the sole legitimate currency market, where the prices are set under the central bank supervision. The main goal of the ICE is to keep the free currency markets in check. 

Related Articles

Iranian Judiciary says assets of jailed billionaire recovered from abroad

Billions of dollars in assets belonging to Iranian billionaire Babak Zanjani jailed for corruption, have been transferred to Iran from an unnamed third country, judiciary-linked Mizan News ... more

Iran imposes 1% annual tax on luxury cars

The Iranian Parliament, also known as Majlis, has set a 1% annual luxury tax on cars valued over IRR35bn ($63,632). This increases the price cap of cars subject to tax by IRR5bn in comparison to ... more

Iran executes 23-year-old man accused of murdering police officer during anti-hijab protests

The Iranian judiciary on January 23 executed Mohammad Qobadlou, a 23-year-old man involved in protests related to Mahsa Amini's death, on charges of murdering a police officer and injuring five ... more