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Capital Markets

Iran: Securitization comes to Iran

Bankers are in the final stages of preparing Iran’s first ever securitization, according the head of a Tehran investment bank.

The Iranian Securities and Exchange Organization has issued a licence for three banks to issue a combined total of about $1.7 billion in mortgage-backed securities, the banker says.

Hossain Abdoh Tabrizi of Bank Eghtesad Novin says that about $500 million in residential mortgage-backed securities will be offered to Iranian investors, probably by the end of September – or at the latest by the end of November. Tabrizi runs the investment banking arm of Bank Eghtesad Novin, one of the country’s biggest private-sector banks. He says the remaining $1.3 billion will be offered by the end of the Iranian year in March 2009.

The mortgages are on the books of three banks: the country’s biggest bank, Bank Melli ($500 million); Bank Eghtesad Novin ($200 million); and Bank Maskan, the national housing bank ($1 billion). They are for houses and apartments and, according to Tabrizi, who was formerly secretary-general of the Tehran Stock Exchange, most are for less than one-third of the value of the collateral.

Restricted investor base

It will be a true-sale Islamic securitization. But the impossibility of obtaining a rating from the US-based agencies, among other hindrances, will mean the investor base will essentially be restricted to Iran.

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