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Jordan auctions 75mn dinars in sukuk deal

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Reuters

Jordan’s central bank said that it had auctioned its first-ever sale of Islamic bonds, or sukuk, a five-year 75 million dinars ($105.9 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 percent 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.
Central bank of Jordan’s main duties include the release and distribution of the Jordanian currency and the maintenance of a national reserve of gold and foreign currencies. The bank also maintains and insures the safety of the banking environment in Jordan.
Jordan set out the preparations to establish the central bank during the late 1950s. However, the Law of the central bank was enacted in 1959.
Thereafter, its operational procedures were commenced on the first day of October 1964. Thereafter the central bank succeeded the Jordan Currency Board which had been established way back in 1950.
Central bank is responsible for determining the suitable investment opportunities as well as setting ratios and components of reserves to ensure their safety, liquidity, and profitability, as these reserves constitute a cornerstone in the stability of the Jordanian Dinar exchange rate. To fulfill this task, bank adopts a flexible investment policy.

that is compatible with the ongoing developments in foreign exchange and international financial markets.

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