Jordan Approves Its First Municipal Sukuk: 400 Million Dinars for Amman at 5.5 Percent
Jordan’s Cabinet on Sunday approved a 400 million dinar Islamic sukuk for the Greater Amman Municipality (GAM), equivalent to 564.2 million dollars, the first issue of its kind by a municipality in the Kingdom. The sukuk uses an ijara muntahia bittamleek, or lease-to-own, structure and is to pay an annual return of 5.5 percent over five years. The government estimates it will cut the city’s financing costs by 70 million dinars, or 98.7 million dollars, over that term, and by 140 million dinars if the sukuk is extended for a further five years on the same assumptions.
What the Cabinet approved
The decision follows months of economic and financial studies by the municipality with government bodies and private sector partners, particularly Islamic banks. GAM set up a dedicated company to run the issue under the Islamic Finance Sukuk Law, and that company has completed the issue documents. The Securities Commission has given the required approvals, including sign-off on the prospectus by its Board of Commissioners and endorsement by the Central Sharia Supervisory Board.
The Central Bank of Jordan will manage the issue, which is aimed at banks, insurance companies and savings, investment and pension funds. The certificates will be tradable on the Amman Stock Exchange under the approved terms and regulatory requirements. The government framed the issue as part of a plan to improve financial management and reduce borrowing costs and make use of Islamic financing opportunities in the domestic market, and linked it to the Economic Modernisation Vision.
The arithmetic of the saving
The statement says the issue is expected to give the municipality “lower-cost financing for its projects and expenditures”, per Petra. It does not say whether the sukuk replaces or refinances any existing borrowing, and it does not give the rate against which the 70 million dinar saving is measured. The full terms are to appear in the prospectus.
What can be computed from the published terms is the scale. At 5.5 percent on 400 million dinars, the annual return bill is 22 million dinars, or 31.0 million dollars, and 110 million dinars over five years if the full face value stays outstanding for the term, on our calculation. Spread evenly, the projected 70 million dinar saving equals 14 million dinars a year, or 3.5 percent of face value each year. Over the five-year term the saving equals 17.5 percent of face value.
If the term is extended to ten years, the projected saving of 140 million dinars means the second five years add another 70 million, the same 14 million a year pace, on what the statement calls the same financial assumptions. At 140 million dinars the saving would equal 35 percent of the issue.
The Amman sukuk in numbers
| Measure | Million dinars | Share of face value |
|---|---|---|
| Face value | 400.0 | 100.0% |
| Annual return at 5.5% | 22.0 | 5.5% |
| Return over five years | 110.0 | 27.5% |
| Projected saving, five years | 70.0 | 17.5% |
| Projected saving if extended to ten years | 140.0 | 35.0% |
| Projected saving per year | 14.0 | 3.5% |
Face value, return rate and projected savings are from the 11 October 2026 decision. Annual and five-year return figures assume the full face value is outstanding for the term; shares and per-year figures are our calculation. The per-year share sets the saving against face value and is not a rate gap.
How 5.5 percent compares with dinar rates
The return on offer is below the accepted rates at the government’s Treasury bond auctions of 6, 16 and 29 September. At the latest five-year Treasury bond auction, which closed on 29 September, the government sold 100 million dinars at a single accepted rate of 6.550 percent against bids of 235 million dinars, a cover of 2.35 times. The Amman sukuk’s return is 1.05 percentage points lower. The two instruments differ in issuer and structure, and the sukuk’s full terms await the prospectus, so the gap is not a measure of the municipality’s saving.
The sukuk return is also 0.50 percentage points below the main policy rate of 6.000 percent, in force since 21 September 2026, and 0.25 points below the 5.750 percent overnight deposit window rate.
Dinar rates against the 5.5 percent sukuk return
| Rate | Level | Gap to sukuk (points) |
|---|---|---|
| GAM sukuk, five years | 5.500% | 0.000 |
| Overnight deposit window | 5.750% | 0.250 |
| Main policy rate | 6.000% | 0.500 |
| Treasury bond No. 35, five years, 29 Sep | 6.550% | 1.050 |
| Treasury bond No. 33, ten years, 6 Sep | 6.649% | 1.149 |
| Treasury bond No. 34, ten years, 16 Sep | 6.700% | 1.200 |
Treasury rates are accepted rates from the auction results; No. 33 is the weighted average of accepted rates, the others cleared at a single rate. Policy rates are those in force from 21 September 2026. Gaps are our calculation, in percentage points.
Treasury auctions on 6, 16 and 29 September each drew bids of more than twice the amount offered: 562.5 million dinars of bids for 250 million dinars sold, a combined cover of 2.25 times on our calculation. The Amman sukuk is 4 times the size of the 29 September five-year sale and 1.6 times the total sold at those three auctions.
Treasury bond auctions of 6, 16 and 29 September
| Auction | Sold (JD million) | Cover (times) |
|---|---|---|
| No. 33, ten years, 6 Sep | 100 | 2.23 |
| No. 34, ten years, 16 Sep | 50 | 2.10 |
| No. 35, five years, 29 Sep | 100 | 2.35 |
| Total | 250 | 2.25 |
Each auction sold its full offered amount. The total cover is total bids of 562.5 million dinars divided by 250 million dinars sold, our calculation.
A first municipal issuer of sukuk
The central bank’s sukuk lists show three government issues, the first and second issues of the government’s special purpose vehicle and a first dollar-denominated sukuk, alongside public institution sukuk from NEPCO that have reached a fifth tranche of an eighth issue. None of these is a municipal issue; the statement describes the Amman sukuk as the first of its kind by a municipality in the Kingdom.
Why it matters: For Amman, the issue brings five-year Islamic funding that the government expects to cut financing costs by 70 million dinars over the term, which the statement links to financial sustainability and better debt management. For Jordan’s financial system, it would give banks, insurers and pension funds a tradable dinar asset from a new class of issuer, priced at 5.5 percent, and would add a municipal issuer alongside the government and public institution issues on those sukuk lists.
Outlook: The prospectus, expected on the municipality’s website in the coming days, is to carry the full terms and conditions, and is the first document that could show whether any borrowing is being replaced, the baseline behind the 70 million dinar saving and the terms of any extension. The municipality and the issue manager are to announce the remaining details together, and trading on the exchange would let investors buy and sell a municipal sukuk in the Kingdom for the first time.
Dollar equivalents in the text are our calculation at 709 fils per dollar, the midpoint of the central bank’s official 708 to 710 fils dollar quote dated 28 September 2026.
Sources: Petra, Central Bank of Jordan, The Edge.
