Why Iran’s Bond Market isn’t Attracting the Money

“The government-backed bonds cannot be traded in foreign currencies. This has practically kept Iran’s sukuk out of global markets,” the SEO chief said. It appears that this barrier can be removed if only the administration of President Hassan Rouhani and parliament work closely together to amend the budget law. Fetanat said he hopes that will be done in a matter of months, and he noted that there already is a huge demand for Iranian sukuk in regional and European markets.

“In our negotiations with other countries, we received a request for $1 billion worth of Islamic bonds,” he said, without identifying the requester, expressing hope that billions of dollars of Islamic bonds will be offered on global markets should existing legal problems be addressed.

Other SEO experts who spoke with Al-Monitor at the exhibition were also optimistic about the future of the Iranian stock and bond markets. Reza Mirzakhani, an expert with SEO’s Research, Development and Islamic Studies Department (RDIS), told Al-Monitor he believes foreign investors will be interested in Sharia-compliant instruments, as financial transactions in Iran are all based on real assets, emphasizing that high-return Islamic bonds are all guaranteed by the Iranian government — a big advantage for new investors. He also noted that the SEO’s Islamic Fiqh (Jurisprudence) Council meets twice a week to discuss how to further improve Sharia-compliant instruments.

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