BP, Shell
Iran, which has the world’s fourth largest crude oil reserves, would be seeking funds in part to upgrade the sectors of its economy that suffered the most during the sanctions. To capitalize on foreign interest already expressed by Royal Dutch Shell Plc, BP Plc and Total SA, the Islamic Republic has to improve industrial infrastructure.
Private sector lenders are also ready to take advantage of access to international markets. Amin Investment Bank, which organizes some 40 percent of the country’s capital market debt sales, is seeking to revive a number of projects it was forced to abandon because of sanctions, Chief Executive Officer Ali Sanginian said Sunday in an interview.
The Iranian lender has been in contact with a major European bank about plans for issuing dollar-denominated sukuks on the international market, Sanginian said, declining to name the potential partner.
Fiscal Prudence
The bulk of Iran’s outstanding debt––about $6.5 billion––is from bilateral loans it received from Asian countries, according to Dina Ennab, an analyst at Capital Intelligence. The country also borrows domestically and has never defaulted on a commercial obligation, she said.
Zada, who used to trade Iranian debt while working in Exotix’s London office, said he expects there’d be investor demand “from all over the world” when the country decides to sell bonds.
“Fiscally, Iran is very prudent and in good stead,” said Zada, the son of an Iranian mother. “They currently have no external debt. I’m sure once sanctions are lifted, there would be substantial demand for their hard currency debt.”
Iran’s total government debt was just 11.4 percent of gross domestic product last year, according to estimates from the CIA’s World Factbook. That’s lower than 91 percent of the countries tracked by the CIA.
Sanctions Cost