Iran to offer bonds worth €1bn to fund energy development

Iran will start offering bonds worth a total of €1 billion ($1.36 billion) on tomorrow to help fund development of its energy sector, the Oil Ministry's website Shana reported yesterday.

It would represent a rare bid by the Islamic Republic, which is under UN and US sanctions over its disputed nuclear work, to raise capital in this way. Analysts say Iran needs funds to help modernise and expand its oil and gas sector, but particularly Western companies are increasingly wary of investing in the major oil producer due to the nuclear dispute.

The bonds, designed to help finance development of phases 15-18 of Iran's South Pars natural gas field, will have a maturity of three years and an interest rate of eight per cent, Shana said, citing the head of state Bank Mellat, Ali Divandari.

They will be offered both to domestic and foreign investors, Shana reported, adding they would be available at Iranian banks abroad. Bank Mellat is handling the bond issue. Economy Minister Shamseddin Hosseini last week said Iran planned to release 1.5 billion euros worth of bonds on March 6.

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