Jakarta. Indonesia's Bank BNI Syariah plans to sell Rp 500 billion ($38.1 million) worth of Islamic bonds to help diversify its financing sources.

In a prospectus published in Investor Daily on Monday, the shariah-geared arm of state-controlled lender Bank Negara Indonesia said it had set the offering period for investors from May 19 to 21 and would list the bonds on the Indonesia Stock Exchange (IDX) on May 27.

BNI Syariah has appointed BNI Securities and Danareksa Sekuritas as underwriters for the bond sale.

The Islamic bonds, called sukuk mudharabah, have a three-year tenor with an annual yield of 12.05 percent.

Shariah banking bans investors from charging interest, in keeping with Islamic tenets, but in return each bondholder is entitled to revenue-sharing income, determined on the basis of the bondholder’s portion, called nisbah.

In January, a director at BNI Syariah was quoted by local media as saying that the bank aimed to see its shariah financing grow by 25 percent this year from total outstanding financing of Rp 15 trillion.

BNI Syariah operated 49 branch offices, 95 sub-branch offices, 17 cash offices and 18 micro outlets throughout Indonesia as of the end of last year.

GlobeAsia