The Economy Ministry sold 50.3 trillion rials ($158 million) bonds in the last auction held Tuesday by the Central Bank of Iran -- the highest sale in the current fiscal year that started in March.
Auctions are held weekly to raise funds for the government’s budget deficits. Banks, non-bank credit institutions, investment funds and institutional investors in the share market are the main buyers.
Two banks (not named) were the only bidders this time in the interbank market putting up bids worth 23.2 trillion rials ($70m), the CBI website reported.
Retail and institutional investors in the capital market bought 2.2 trillion rials ($6.9m) bonds. The ministry set a maximum 22.01% for bonds maturing in July 2025. The rate for one-year maturity bonds was 21.59%.
Underwriting financial institutions purchased 25 trillion rials ($78.61) of the new debt. Both banks and institutional investors favored bonds with longer maturity and lower yields.
According to the ministry data, 502.7 trillion rials ($1.58 billion) bonds have been sold in 18 auctions that commenced in May.
In addition to bonds, the government has offered treasury bills worth 350 trillion rials ($1.11b) since March. Treasury bills are underwritten and given to government contractors in lieu of unpaid bills.
The CBI said it will hold the next auction on Sept. 28 and offer 67.26 trillion rials ($211m) in new debt.
Debt is offered in line with provisions of the 2022-23 budget in which the government is allowed to sell 860 trillion rials ($2.8b) bonds by March 2023.
Bond auctions started in May 2020 when banks and investment funds were instructed to allocate a portion of their resources to buy debt. Later institutional investors and retail traders in the stock market joined.
