The Eurobond will go down as one of the fastest arranged issues in history. 'The execution was very quick,' says a banker involved in the deal. 'Within two-three days everything was put in place.'

The Eur 100 ($103) notes had a launch price of Eur 99.43 ($102). With a coupon of 7.75 per cent, the paper had a launch spread of 401 basis points (bp) over similarly-dated European swap transactions. The bond, which matures on 21 April 2008, was priced below Iran's last issue, which had a launch price of 425 bp and a coupon of 8.75 per cent.

Eight senior co-leaders and three co-leading banks joined the two lead arranging banks in the transaction. The senior co-leaders were Arab Banking Corporation, Emirates Bank International, Gulf International Bank, National Bank of Dubai, Qatar National Bank, Hypovereinsbank, Standard Chartered Bankand Standard Bank. The co-leaders were Ahli United Bank, Shuaa Capitaland DEPFA Bank.

Sources close to the deal say that the majority of investors came from the Middle East, picking up 64 per cent of the paper. The European subscriber base accounted for the remainder, led by the UK at 16 per cent, Germany at 11 per cent, Switzerland at 5 per cent, France at 2 per cent and Italy and the Benelux states at 1 per cent each. An estimated 70 per cent of investors were banks, followed by asset managers at 12 per cent, fund managers at 10 per cent and retailers at 8 per cent.

The successful issue reflects the strong appetite for Iranian debt despite the risk of US military activity in neighbouring Iraq, Washington's economic sanctions on Tehran and the ongoing domestic struggle between different political factions. Iran's main assets are the positive external debt figure and the country's position as a net external creditor.

'As a large net external creditor, Iran compares well not only with its rating peers, but in fact with all rated sovereigns,' says James McCormack, senior director of London-based rating agency Fitch, which assigned a B+ rating to the Eurobond.

Iran's Bank Markazi (central bank) will allocate the Eurobond proceeds to National Iranian Oil Company. According to the Iranian budget plan for 2002/03, Bank Markazi is permitted to raise $2,000 million on international markets, half of which can be obtained in bonds.