Iran's Lotus Parsian Investment Bank (TEDPIX:LOTUS) agreed to underwrite and make a market in IRR1.5 trillion ($646,000) of sukuk, according to a bourse filing on September 27.

The paper, listed under the symbol SAKSHO77, was issued by Sanat Gorooh Industrial Company and pays an annual return of 23%, distributed quarterly over a two-year term. Lotus' tranche equals 30% of the issue, which puts the total at IRR5 trillion ($2.15mn). The bank signed the underwriting commitment on August 28.

Lotus will earn an underwriting fee of IRR15bn ($6,460) and a market-making fee of IRR300bn ($129,000), recognised over the two-year life of the paper, the filing said.

Sukuk are Islamic bonds built around assets or trades, since Iran's banking law bars conventional interest, and listed companies use them to raise debt on the Tehran market. An underwriter commits to buy any paper left unsold, while a market maker keeps a two-way price once it trades. A fixed 23% return leaves holders exposed to the war inflation shock that has pushed up prices across the economy.

Lotus Parsian Investment Bank is a Tehran-based investment bank in the Parsian Financial Group, which chairs its board. It is licensed to underwrite securities, give underwriting commitments and commit to buy securities in secondary offerings, and is listed on the Tehran Stock Exchange. Ehsan Moradi is chief executive. Its registered capital stands at IRR8.5 trillion ($3.66mn).