Jordan launches first offering of Islamic bonds this month

Published September 3rd, 2015 - 11:28 GMT

The government will launch the first issuance of Islamic bonds, sukuk, this month worth JD150 million, Finance Ministry Secretary General Izzeddin Kanakrieh said Thursday.

Kanakrieh told The Jordan Times that another issuance is also expected before the end of the year to finance projects of the Jordan Water Authority, adding that the first would cover the purchases of the state-owned National Electric Power Company. 

According to the official, the volume of sukuk for this year is set to be between JD200 million and JD300 million. 

Next year, the government will issue Islamic bonds to finance purchasing headquarters for the Kingdom’s diplomatic missions, build schools and other government offices, particularly rented buildings with “expensive rentals”, he said. 

Kanakrieh said that next year, the government will benefit more from the Sharia-compliant financing tool as it will issue bonds worth hundreds of millions. 

“The exact amount will be determined in the 2016 budget bill, which is being prepared now,” he noted.  

A special-purpose company for issuing the sukuk will be ready within a week as it is in the process of registration at the Companies Control Department, he said. 

Islamic banks in Jordan enjoy liquidity in excess of JD1.4 billion, according to official data. 

Jordan’s only private sector sukuk issuance was issued by Al Rajhi Cement for JD85 million in 2011. 

In 2012, the Parliament passed the Islamic Finance Sukuk Law to allow both public and private entities to issue Islamic bonds in dinars and in foreign currencies. 

In April of this year, the government selected the Islamic Corporation for the Development of the Private Sector, an arm of the Jeddah-based Islamic Development Bank, to support the country’s debut for the planned domestic sukuk offering.

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