The government’s bond offer held by the Central Bank of Iran on Wednesday got a cold shoulder, again.
Auctions are held weekly by the CBI on behalf of the Economy Ministry to raise funds for the government’s gaping budget holes.
Buyers of the debt normally are banks, credit institutions, investment funds and institutional investors. The 32nd auction ended with no buyers, the CBI website reported.
Banks mostly prefer short-term debt with lower yields while institutional investors are more inclined towards long-term debt with higher dividends.
The auction held in the previous week barely generated 32.24 trillion rials ($83.7 million) as major buyers stayed away for the fifth week in a row. Banks took 18.28 trillion rials in long-term debt and 13.959 trillion rials in short-term bonds.
The ministry said it will hold the next auction on January 1 to offer 68.27 trillion rials ($177.7m) in new debt with November 2023 as maturity date.
Weekly 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 that ended in March 2022 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).
The ministry said recently that it paid 1,337 trillion rials ($3.47 billion) in principal and interest on bonds up until Dec 21.
More than 997.171 trillion rials ($2.82b) was the principal and 340.802 trillion rials ($806.6m) interest it being over and above government income from new debt offered this year.
