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EghtesadOnline: The nominal value of Iran's debt market stood at 929.81 trillion rials ($6.57 billion) on Monday. The figure was 717.61 trillion rials ($5.07 billion) in the beginning of the current fiscal (March 21), indicating an increase of around 30%, said Mahsa Radfar, the head of Securities and Exchange Organization’s debt security issuance.

According to Radfar, 291.92 trillion rials ($2.06 billion) of debt securities has been issued in the current year to register a massive 120% rise year-on-year. About 78.92 trillion rials ($557.79 million) worth of those securities has matured, the Securities & Exchange News Agency reported on Monday.

She said growth in the debt market and economic players’ and investors’ interest originate from the variety of financing instruments available in the capital market, timely fulfillment of commitments and efforts to improve the financing platform.

“The government is a significant player in the debt market and it has earned investors’ trust by meeting its commitments on time. On the other hand, private sector feedback indicates satisfaction with the processes and instruments of the debt market,” Radfar said referring to how different sectors of the economy view the debt market, according to Financial Tribune.

Iran is developing a range of financial products, from Islamic bonds to warrants and insurance-linked securities, in an effort to give local firms more funding options as US sanctions pile pressure on the economy.

The capital market regulator, the Securities and Exchange Organization, has started work on a new structure for Islamic bonds. 

Meanwhile, the SEO is considering whether to introduce insurance-linked securities so that domestic insurers can offload some portfolio risk in the capital markets.

ILS are typically tied to natural catastrophes such as earthquakes and offer high yields; investors can lose their principal if a catastrophe loss is triggered. 

They could serve as an alternative to reinsurance cover, which is scarce as sanctions mean Iran is shut out of global reinsurance markets such as Lloyd’s of London. 

Radfar also referred to The World Economic Forum’s “Global Competitiveness Report 2018-19” and said Iran’s financial system indicator shows that the country is on the path to build a competitive economy.

Iran’s Global Competitiveness Index dropped by one place compared to last year with a score of 54.9 out of 100. The country now ranks 89th out of 140 countries surveyed. Regarding the financial system’s pillar, Iran was ranked 98th with a score of 52.5. The country has fared best in the subcategory of “domestic credit to private sector” (57th) and worst in “soundness of banks” (131st).

Intro: Growth in the debt market and economic players’ and investors’ interest originate from the variety of financing instruments available in the capital market.

 

Iran Debt Market nominal value Mahsa Radfar