Amman:The Cabinet has approved the issuance of JD 400 million in Islamic financing sukuk by the Greater Amman Municipality (GAM), utilizing an Ijara Muntahia Bittamleek (lease-to-own) structure. This issuance, with an annual return of 5.5 percent over five years, aims to enhance financial management and reduce borrowing costs while capitalizing on domestic Islamic financing opportunities.
According to Jordan News Agency, this marks the first issuance of its kind by a municipality in the Kingdom, reinforcing Jordan's position in Islamic finance and supporting the Economic Modernisation Vision. GAM conducted extensive economic and financial studies in collaboration with government entities and private-sector partners, particularly Islamic banks, leading to the establishment of a dedicated company to manage the sukuk issuance.
The company has completed the necessary documentation and obtained approvals from the Securities Commission, including endorsement by the Central Sharia Supervisory Board. The Central Bank of Jordan will manage the issuance, which targets banks, insurance companies, and savings, investment, and pension funds. The sukuk will be tradable on the Amman Stock Exchange, complying with regulatory requirements.
This issuance introduces a new investment and financing instrument aimed at diversifying investment opportunities and expanding the use of Islamic finance. It is expected to strengthen GAM's financial governance by providing lower-cost financing for projects, potentially saving JD 70 million over the initial five-year term, with savings reaching JD 140 million if extended.
Further details will be announced by GAM in coordination with the Central Bank of Jordan, with the prospectus expected to be published on the municipality's website soon.