The Economy Ministry sold 27.5 trillion rials ($85.9 million) bonds in the third weekly auction held Tuesday by the Central Bank of Iran.
The auctions are held on weekly to raise funds for the government’s deficit spending. Banks, non-bank credit institutions, investment funds and institutional investors in the share market are buyers of the bonds.
Bidders this time were three banks who put in bids worth 26.8 trillion rials ($83.7m) but the Economy Ministry accepted 10.6 trillion rials ($33m) of the bids, according to data seen on the CBI website.
Retail and institutional investors in the bourse purchased 16.9 trillion rials ($52.8m) of the bonds. The Economy Ministry set the yield at 22% for bonds maturing in August 2024. The rate for one-year maturity bonds was 21.5%.
Like the past week, banks showed interest in bonds with shorter maturity and lower yields whereas institutional investors bought bonds with high yields.
According to Economy Mministry data, 90.29 trillion rials ($282m) bonds have been sold in the three auctions.
Islamic Treasury Bonds worth 150 trillion rials ($468m) were issued since the beginning of the current fiscal in late March. Treasury bills are underwritten and given to government contractors in lieu of unpaid bills. The CBI will hold the next auction on June 14 and offer 206.6 trillion rials ($645m) in new debt.
As per rules, investors must put in bids for a minimum of 500,000 bonds each at par value of 1000 rials via the interbank auction platform managed by the CBI as well as the trade platform of the Tehran Securities Exchange Technology Management Company.
The bond auctions started in May 2020 when banks and investment funds were compelled to allocate a significant portion of their resources to buy government bonds. Later institutional investors and retail traders in the stock market joined.
In the last fiscal year the government held 36 bond auctions and earned 906 trillion rials ($2.8 billion), down 27% from the year before.
The new bond offers are in line with provisions of the budget law in which the government is allowed to sell 860 trillion rials ($2.7b) bonds in the fiscal year ending March 2023.
