Abu Hammour describes sale of bonds last year as a boon

Minister of Finance Mohammad Abu Hammour on Sunday described the issuance of $750 million in five-year bonds on international markets in November last year as a boon for Jordan’s finances. He explained that if the government was to issue bonds in international markets at present it would carry much higher annual interest rates due to political unrests in the region, which prompted international ratings agencies to downgrade credit ratings of several countries in the Middle East and North Africa. “The government’s selling of bonds to about 220 international investors in November last year at a fixed annual interest rate of 3.875 per cent was successful as it saved the treasury millions of dollars,” the minister told reporters noting that the sale was oversubscribed. Abu Hammour also told reporters that a draft law is currently at the Legislation and Opinion Bureau to facilitate the issuance of Islamic sukuk (bonds) in the Kingdom in a bid to enable the government diversify its borrowing tools. Stating the draft law will be submitted to Parliament next month for approval, he indicated that once the legislation is approved it will also open the door for the private sector to tap the Sharia-compliant financing instruments. “The Islamic sukuk market will enable the government to diversify its borrowing and financing tools and will also allow the private sector to borrow at competitive rates,” he said. Islamic sukuk issuance will help reduce pressure on public finance and will also increase investments in the country because there are many investors in Jordan and the region who favour Islamic Sharia-compliant finance. Public debt ratio to the gross domestic product (GDP) is currently at 58 per cent, he noted. According to public debt law, the debt ratio should not exceed 60 per cent of the GDP.