Jordan auctions 75m dinars in maiden sovereign sukuk deal

Amman: Jordan’s central bank said on Sunday it had auctioned its first-ever sale of Islamic bonds, or sukuk, a five-year 75 million dinars ($105.9 million, Dh388.7 million) deal to help finance purchases by state utility firm National Electric Power Company.

The sukuk, which used a cost-plus-profit arrangement known as murabaha, attracted 205 million dinars worth of bids paying a 3.5 per cent profit rate, the central bank said.

Sovereign sales of sukuk could help broaden Jordan’s sources of funding, giving it access to a large pool of Islamic investment funds in the Gulf region as well as enabling it to tap liquidity from domestic Islamic banks.

Jordan has a small but growing Islamic finance industry. In 2011, local company Al Rajhi Cement issued an 85 million dinar, seven-year sukuk, the first in the country. Jordan Dubai Islamic Bank began operating in January 2010.