The weekly government bond auction held by the Central Bank of Iran barely generated 5.55 trillion rials ($15.3 million), after getting a cold shoulder for two consecutive weeks.
Auctions are held by CBI on behalf of the Economy Ministry to raise funds for the government’s deficit spending. Buyers of the debt normally are banks, credit institutions, investment funds and institutional investors.
In the extended absence of banks and credit institutions, this week, equity market investors were the only buyers. Retail and institutional investors in the capital market bought 464.6 billion rials in long-term and 5.04 trillion rials in short-term debt.
The shortest maturity date was May 2023 with 2.95% for bonds maturing June 2024 while the rate for short-term debt at 22.49%.
Banks by and large prefer short-term debt that have lower yields while institutional investors are inclined towards long-term debt with higher profits.
The two previous auctions failed to attract investors. Debt worth 10.62 trillion rials ($29.1 million) was sold in the 26th auction.
The ministry said it will hold the next auction on Dec. 13 to offer 60.97 trillion rials ($172.7m) in new debt with May 2023 as the maturity date to induce buyers.
Bond auctions started in May 2020 when banks and investment funds were instructed by the CBI to allocate a part of their resources to buy government debt. Later, institutional investors and retail traders in the stock market joined.
According to ministry data, 622.911 trillion rials ($1.76 billion) bonds have been sold since March.
In addition to bonds, the government has sold treasury bills worth 350 trillion rials ($991.5m) this year. Treasury bills are underwritten and given to contractors in lieu of unpaid bills.
In the last fiscal year ending March the CBI held 36 auctions generating 906 trillion rials ($3b), down 27% from the year before.
Debt is offered in line with the provisions of the 2022-23 budget in which the government is allowed to offer 860 trillion rials ($2.8b) by next March.
The ministry said recently that it paid the principal and interest on bonds worth 1,300 trillion rials ($3.68 billion) up until Dec 6.
More than 997.171 trillion rials ($2.82b) was the principal and 303.802 trillion rials ($806.6m) interest. The bond sale was over and above government income from new debt offered this year, it said.
