Jordan issues local currency sukuk in boon for banks

Dubai: Jordan’s government has raised 34 million dinars ($47.9 million) in its first issue of a local currency sukuk for its own funding purposes, a deal that will benefit the country’s Islamic banks, the government said on Monday. The Islamic bonds, which use a common sale and leaseback format known as ijara, have a tenor of five years and an expected profit rate of 3.01 per cent. Jordanian finance minister Omar Malhas said the issue, which was more than three times subscribed, priced inside the country’s conventional bond curve — a sign of strong demand.

“The sovereign issuance is of great significance for the kingdom’s four full-fledged Islamic banks, because it will give them a badly needed tool to manage their excess liquidity, estimated to be 1.4 billion dinars,” he said in a statement.