– Following the policies to expand the scope of Iran Debt Market and providing Iranian companies with proper finances via debt securities, a new wave of corporate and governmental Sukuks are to be published soon on Iran Fara Bourse and Tehran Stock Exchange (see description below):
– In an interview, the head of the Securities and Exchange Organization of Iran enumerated the reasons for the 27% growth of the Tehran Stock Exchange major index (TEDPIX) in the current year. Referring to the whole trading value (4 exchange markets) exceeding IRR 2,100,000 (cUSD 47 bn) bn, he firstly mentioned President Rouhani’s administration’s economic policies to lower interest rate on banking deposits, which also dragged bonds yield rate and therefore, financing costs for companies down as well. Another factor was companies’ profitability growth, mostly due to facilities offered by the government and global commodity prices soar. A part of this growth was due to the USD/IRR increase, which raised export-oriented companies’ income. Applying changes to the halting-reopening mechanism of the market to accelerate the whole process played another crucial role by increasing the market liquidity. To all these, the reduction in trading commission must also be noted, which will show its positive effect in the long run.
– According to the Central Bank of Iran’s (CBI) statistics, the government’s tax income has surpassed its oil revenue of Iran’s Economy by IRR 76,000 in the first 10 months of the current year. In this regard, the Minister of Economic Affairs and Finance released a plan to revive the country’s current tax system in 2018/19 which contains 3 new tax bases as well as organizing tax exemption schemes mostly through lowering its ceiling in free trade zones and agriculture sector among other things.
– The cabinet members released the initial draft of bylaw governing the partnership between Iranian banks and credit institutes and foreign counterparts, either individuals or institutions. According to the new bylaw, the caps for foreign participation on Iranian Banks and credit institutes are as follows:
– In an attempt to utilize the capacities of Iran’s Debt Market, Social Security Organization of Iran is to issue IRR 10,000 bn (cUSD 223.46 mn) worth of Sukuk Ijarah with a nominal rate of 20%, the maturity of 1 year and semi-annual coupon payments. The underlying asset is, for the first time, 7.89% of “PTAP1″ shares priced at IRR 1,266 per share. Bank Refah will act as the guarantor of this securities paying the principal and interest in case of default.
– In order to maintain the current calm situation of the FX market, a new wave of Islamic Treasury Bills with a nominal yield of 20.5% will be issued on Iran Fara Bourse from Saturday, Mar 10, 2018.” Said Nobakht the Spokesperson of the Government of Iran. President Rohani’s administration tried hard to leash USD/IRR before by introducing the CBI rescue package.
– On the 7th conference on Monetary Policies and Challenges Ahead Iran Banking Sector and Production held yesterday, the modernization and independence of the Iran Central Bank were deeply discussed. Resorting to examples like the operation of non-regulated financial institutions plus the divergence between the interest rate on banking deposits and the declining inflation rate to stress on the necessity of the CBI independence, lecturers raised the question whether the CBI had the required structure and authority to prevent such problems in the first place or not.
– Iran Central Bank managed to control the forex market fluctuations through offering its rescue package over the past week. While some economists believe that such a package will act as a proper tool to relax the current fluctuations and enable the policy maker to implement its reform plans free from irrational behaviors, there are some disagreeing with high interest rates, even for a temporary and short period of time. In other words, the first group believe that lowering such a rate by decree will not yield the proper result the policy maker is looking for while the other group say that the current CBI supervisory structure and not-respecting health indices by banks will push them towards old days, paving the way for un-regulated financial institutions re-gaining power in the market. However, what is common between those for and against the CBI directive lies within the temporary nature of this solution, which will only act as a painkiller and the need to address the structural reforms in monetary and financial areas ASAP.
– Securities and Exchange Organization of Iran granted its principal consent on issuance of IRR 1,050 bn worth of Sukuk Ijara (on Iran Capital Market) for Alborz Railways Equipment Co. in order to buy 15 locomotives. These securities will be offering on Iran Fara Bourse and have a maturity of 5 years with Ijara (Rent) rate of 15%. The guarantor for new corporate Sukuk is the Railways of Islamic Republic of Iran and Maskan Investment Bank will act as the market maker.
– Just the other day, Central Bank of Iran put a directive into effect allowing banks to issue 20% (Per annum) certificate of deposits which eventually affected Iran Debt Market. Aiming to stabilize the FX market, CBI directive caused a plunge in debt securities’, specifically Islamic Treasury Bills, prices, ended for almost all of the YTMs to hike over 20%. Analysts believed, considering the benefits of higher rates on Iran Debt Market contrary to banking sector, only by absorbing the free money streams by the capital market, rate jumps would have lesser inflation effect on the nation’s economy. Below table shows the latest status of Islamic Treasuries with highest yields as of Feb 17, 2018.