The Khodro bond will be issued on a five-year basis but pricing details are still vague. Before further negotiations can take place between Khodro and the banks – BNP Paribas, Commerzbank Securitiesand the Netherlands’ HVB Corporates & Markets– a sovereign guarantee needs to be issued by the government, a standard procedure for all bonds worth more than $300 million.

The NIOC and NPC bonds will come to market after the Khodro issue. Both are subject to the approval of the government’s fourth five-year development plan (FYDP), which has been sent back to the Majlis (parliament) for reappraisal after it was rejected by the government watchdog Guardian Council. The new FYDP was expected to make significant changes to Oil Ministry subsidiaries such as NIOC and NPC, distancing them further from the government.

Iran in 2002 issued a Eur 375 million ($451 million) bond, on a 7.75 per cent coupon and with notes falling due in 2008. BNP Paribas lead arranged that offer, in which both Commerzbank and HVB participated.