For Free Headlines Submit Your Email
Thursday, April 25, 2024 9:47 GMT
Iran will allow holders of government sukuk, or Islamic bonds, to be repaid in crude oil exports, state-run Press TV reported, citing a finance ministry announcement. Holders of sukuk due before May 2021 can apply to receive the equivalent of their bonds and their interest in crude cargoes, it said.It’s unclear how the transactions would work -- presumably, the bondholders could be given options on futures contracts, but the mechanics are not spelled out in the report.Iran has considered a number of options to boost state revenue battered by the coronavirus crisis and U.S. sanctions. Earlier this year, it was planning to offer oil-backed securities to its citizens and to sell stakes in state companies on the local stock market. Critics said at the time that backing bonds through future oil sales would create a huge financial burden for the next administrative governments.However, head of Iran’s Plan and Budget Organization (PBO) said on Saturday that parts of oil shipments that have been planned for sale to finance the budget in Iran’s next fiscal year would be offered in the form of future contracts. Mohammad-Bagher Nobakht, a deputy of the president, said such future contracts could also be applicable to the current year’s budget.Iran has used bond issuance to shore up finances that have been affected by lower sales of oil, mainly due to the American sanctions as well as lower demand for crude in the international markets. Recent reports have suggested that Iran’s crude exports increased significantly in September, to nearly 1.5 million barrels per day (mbd), from lows of 0.5 mbd seen in recent monthsIran’s economy has been suffering since 2018, when the United States exited Tehran’s nuclear deal with six world powers and re-imposed sanctions, strangling Iran’s oil trade. This would be the first time Iran has used oil to repay bonds issued in the local market, said Press TV. - Reuters, Iran Daily