Eleven banks originally submitted requests for proposals (RFP) in August 2001 for the mandate. The shortlisted banks are: BNP Paribas, Commerzbank, Credit Agricole Indosuez, Deutsche Bankand HSBC Investment Bank.

There has been no indication as to whether Bank Markazi will appoint one or two lead arrangers for the bond and how many sub-underwriters will come on board. 'It will all depend on the terms and conditions that will be provided by Bank Markazi,' says one international banker in Tehran.

Some bankers say a joint mandate is likely. 'One would expect the appointment of two lead arrangers,' says a London-based banker. 'The majority of large sovereign issues are usually arranged by two banks.'

International bankers expect the launch of the Eurobond before the end of Iran's financial year on 20 March. According to the specifications outlined in the RFPs, the paper will have a minimum size of Eur 300 million ($266 million), with maturity of five-seven years. The bond will be open to international subscribers outside the US.

'The market conditions for the issue are fine,' says the Tehran-based banker. 'However, investors will be looking closely following the 11 September events and developments in Argentina.'

The announcement of the mandate may coincide with the assignment of a sovereign credit rating by London-based credit ratings agency Fitch. The company has already visited Tehran and is understood to be in a position to issue a rating as early as February.