'No one has been mandated yet, but we could end up with a situation in which one bank helps get the rating and two act as joint bookrunners,' says a banker close to the transaction. Commerzbank Securitiesand HVB Corporates & Marketswere also interested in advising on the rating process (MEED 2:7:04).

The bond is likely to be worth about Eur 300 million ($372 million) and it could be issued as soon as the fourth quarter.

Khodro's recently established investment arm, Investment Banking Group (IBG), is promoting the bond. It says the company is hoping for a rating of BBB- or B+ with a positive outlook.

The proposed paper issue is expected to have a tenor of five years and it could pay a coupon of 6.25-7 per cent. No detailed discussions have been held over pricing, but a substantial spread over Iran's sovereign eurobond - perhaps 100-150 basis points - is expected.

'It's difficult to know where the market would price Iranian risk. The sovereign debt is very thinly traded,' says a bond trader.

IBG is also working on currency hedging for the manufacturer, which is estimated to have lost Eur 80 million ($99 million) last year in currency fluctuation. BNP Paribas and ABN Amroare working on that deal, with talks under way with HSBC and Societe Generalefor future work.