Ali Saleh-Abadi, The President of Iranian Securities and Exchange Organization (SEO) announced that SEO ratified issuing sukuk, Islamic bond.
On 13 March 2011, Mahan Airline issued Sukuk with the value of IRR 291 billion in Farabourse (Iran's OTC market) to finance its network developmental projects for the first time in the Iranian Capital
Market.
"The Organization is developing the regulation of new financial instrument Istisna (Sukuk Using Al-Istisna Structure), which is expected to be approved by the Supreme Council of Exchange early next year", SEO spokesman noted.
Saleh Abadi added that currently six other companies have lodged their requests for issuing Sukuk to Securities Exchange Organization. In addition to these companies, a company has requested to issue Sukuk in the free zones with the aim of attracting foreign investment.
Sukuk, which are often called Islamic bonds, cover Islamic investment instruments that are registered in the name of the bondholders.
Sukuks are always linked to underlying assets through a variety of contract structures such as Istisna, Ijara or Musharaka contracts. Holding a sukuk certificate represents ownership in the underlying asset. Sukuks are generally treated as a guaranteed Debt.
Although similar in structure to asset-backed securities, Sukuk's issuer is obliged to pay the bondholder 100% of the redemp on amount and a periodic distribu on amount, regardless of how the underlying performs.
