The five new companies looking at a bond issue are Bank Melli Investment Company, Iran Marine Industries Company (Sadra), Arak Petrochemical Company, Behshahr Industrial Development Groupand Fars & Khuzestan Cement Company (FKCC). The local Investment Banking Group (IBG)is the exclusive nominated representative for all five companies.

IBG and FKCC are close to selecting an international bank to advise on the credit rating and bond issue. The other four companies will be advised by HypoVereinsbankand Dresdner Bank. Fitchwill assign ratings. IBG says it expects the companies to be rated close to Iran's sovereign rating ceiling of BB-. The bonds are expected to have a total value of more than $1,250 million, with IBG aiming for a five-year tenor.

BNP is aiming to finalise its agreement with Khodro this summer, allowing Fitch to rate the company soon afterwards and a bond to be issued later by year-end. The issue is expected to be Iran's first corporate bond issue, following a successful sovereign bond issue in 2002. National Petrochemical Companyhas also talked of a possible bond issue but says it now has alternative ways of raising finance.