Iran is seeking to reduce its borrowings from the country'sbanks and local firms and focus on capital markets, Reuters reported April 13.

"The banking sector is out of money and out of capital,so the government is looking to reduce its reliance on the sector. It now needsto seek the capital markets," Navid Kalhor, an equityresearch analyst at Tehran investment company Agah Group, reportedly said,while estimating that Iran's government depends on banks for as much as 95% ofits funding.

Given the lifting of international sanctions against thecountry, Iran's government is now crafting plans to offer various debtinstruments in the markets, rather than placing debt directly with banks and companies,the report explained.

One step in that direction is the Iranian Securities andExchange Organization's recent approval for the government to use lease-basedIslamic bonds, known as ijara sukuk. Such bonds can be supported by creditorassets to help settle state debt to local firms, potentially helping to injectlife into Iran's dormant debt markets.

Meanwhile, Federica Mogherini, high representative and vicepresident of the EU Foreign Affairs Council, and other EU officials are set tomeet with the Tehran government on April 16 to discuss, among other matters,banking and trade, Reuters wrote, citing a senior EU official.  

The visit "is about us re-engaging gradually," theofficial reportedly said, while noting that talks will also focus on opening apermanent EU diplomatic mission in Iran.