TEHRAN -- The Central Bank of Iran (CBI) on Sunday will start issuing participating bonds with an annual interest rate of 17 percent, the press reported here on Saturday.

It is reported that the CBI will continue issuing the bonds for two days in five denominations of one million rials (U.S.$125), two million rials (U.S.$250), five million rials (U.S.$625), 10 million rials (U.S.$1,250), and 20 million rials (U.S.$1,500).

The bonds will be marketed by six major Iranian banks of Melli, Sepah, Saderat, Tejarat, Refah Kargaran and Keshavarzi for a ten-day period, starting January 12.

The interest of the bonds will be calculated on a daily basis and will be given to the holders once every three months.

An official said that the bonds will be welcomed by the people given a two percent increase in interests from an already 15 percent offered last year.

The CBI had already announced that it would issue participating bonds totally worth of about two trillion rials (U.S.$250 million) to encourage domestic investment and facilitate government efforts to push forward the Third Five-Year Economic Development Plan (2000-2005).

The bonds will offer a number of advantages such as transfer of ownership, exemption from tax, and repurchase by all agent banks.

The CBI will furthermore guarantee the payment of the original amount as well as the profit accrued on these bonds.