Bahrain Monetary Agency (BMA), the Gulf Arab state's central bank, said on Monday it placed 40 million dinars ($106 million) in 10-year Islamic bonds called Ijara Sukuk.
The bonds carry a return of 5.125 percent to be paid twice a year in January and July and will mature in July 2014, the agency said in a statement.
"It brings to a total of $1.13 billion the value of Ijara Sukuk issued by the BMA," the statement added.
It said the Sukuk were the first in the local currency, while all previous issues were in US dollars.
The bonds will be listed on the Bahrain stock market which the kingdom is promoting as a hub for Islamic bond trading.
Islamic bonds pay no direct interest, which Muslims consider usury. They instead make regular payments based on profits from approved investments.
Waleed Rashdan, BMA's executive director of banking operations, urged in the statement the private sector to issue long term securities, saying they were increasingly in demand.
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