As a result of the tense standoff between Iran and the US, the multi-national nuclear deal which last year opened the doors for the Islamic Republic’s return to the international stage hangs in the balance. Regardless, the country with the largest Islamic financial market is still pushing the envelope on welcoming rating agencies with an aim to promoting transparency and inducing investments to and from the country.
Since the lifting of sanctions in January 2016, there has been an overwhelming international interest into the country’s once limited market. Global firms like Deloitte, Fraser, KPMG, and PwC have all taken keen interest in venturing into this new market in an effort to lift it to international standards. Deals and partnerships with major superpowers like China have already been signed. As a result of its new geo-political emergence, Iranian authorities have begun talks with Moody’s Investors Service and Fitch Ratings to re-establish sovereign credit rating surveillance on the Middle East’s second largest economy.
The Sukuk market stands to benefit greatly from the lifting of sanctions. Islamic Finance News recently reported that “the government issued IRR35 trillion (US$1.06 billion) worth of Sukuk Ijarah through two ministries while the country’s largest auto manufacturer is reportedly looking to come to market with an IRR7 trillion (US$211.9 million) Murabahah facility.” This is expected to attract foreign Sharia complaint financing into the Republic.
In the midst of the country’s Securities and Exchange Organization (SEO) welcoming new rating agencies, the Central Bank of Iran, which is the banking regulator, is on the other hand going ahead with their own design of a new national rating system implemented through an already functioning affiliate, the Iran Credit Scoring company.
Despite huge financial deals with big western multi-national companies in Europe and Asia since the sanctions were lifted, Iran’s dream of being a powerhouse in Islamic finance seems to be hitting a rocky road thanks to the renewed diplomatic spat between the country and the new US administration of President Donald trump.
Last month Iranian President Hassan Rouhani called Trump administration members the “rogue newcomers to the world of politics.” In his speech at the United Nations General Assembly at the UN headquarters, without naming Trump directly, Rouhani stated that the UN as an institution established to promote peace, was no place for “hateful” words. The Iranian President later twitted using his personal twitter handle @HassanRouhani to buttress his UN speech.
“Ugly, ignorant words were spoken by the US president against the Iranian nation. Full or hatred & baseless allegations and unfit for #UNGA.”
— Hassan Rouhani (@HassanRouhani) September 20, 2017
This was a follow up to a speech made by Trump at the same global forum criticizing the 2015 nuclear deal calling it “one of the worst and most one-sided transactions the United States has ever entered into”. Trump further called the Iranian government “a corrupt dictatorship behind the false guise of a democracy” that has “turned a wealthy country, with a rich history and culture into an economically depleted rogue state whose chief exports are violence, bloodshed, and chaos.” These while hinting that the US will be pulling out of the deal soon.
Iran continues to make measured gains in attracting new financial capital despite the current US administration’s misgivings of the landmark deal that last year gave hope to the world when the Islamic Republic penned a groundbreaking agreement with a league of optimistic countries.