The government program to sell bonds to plug its budget deficits faltered in the last weekly auction for the second straight week
Total bonds offered at both the interbank and equities market hardly generated 4.6 trillion rials ($14.8 million) -- the lowest since the auctions started in May.
Bond auctions are held regularly to raise funds for the government’s deficit spending. The government has made 232 trillion rials ($748m) in bonds in ten auctions, according to central bank data.
Banks were again absent for the third week in a row and buyers were institutional investors in the capital market, namely underwriting companies, investment banks and mutual funds.
Despite obligations imposed by the Central Bank of Iran to allocate a percentage of financial resources for bonds, the share of banks in bond program has been lower compared to other investors.
Earlier, the Money and Credit Council, the top monetary decision-making body, obliged banks to set aside at least 3% of their financial resources to bonds.
According to data published by the Economy Ministry, banks and credit institutions accounted for 30% of the total bonds while capital market investors took the rest.
Treasury bonds worth 300 trillion rials ($967m) have been issued since the beginning of the current fiscal year on March 21. Treasury bills are underwritten and given to government contractors for unpaid bills.
The CBI said it will hold the next auction on Tuesday for 82.4 trillion rials ($265m) bonds.
Opening a primary interbank market for bond auctions is a CBI initiative, started in May 2020, to help the government raise funds as it struggles with huge deficits due to the US sanctions and continued loss of revenue.
Bond sales are in line with provisions of the 2022-23 budget in which the government is allowed to sell 860 trillion rials ($2.7b) bonds by next March.
