Bonds worth 61.5 trillion rials ($315 million) were sold in the fourth round of a series of weekly bond auctions held by the Central Bank of Iran.
CBI hosts the auctions every Tuesday for Islamic bonds issued by the government to lenders and non-bank financial institutions. Results are released by the CBI a day after the auction.
Holding bond auctions is an initiative to help the government raise funds for budgetary needs as it struggles with rising deficits.
The government had offered 120 trillion rials ($615 million) in Murabeha bonds on Tuesday, asking banks and non-bank institutions to bid.
According to the CBI public relations office, bidders including 20 banks and investments funds, put in bids worth 133 trillion rials ($682 million) but the Economy Ministry accepted 61.5 trillion rials of the best bids.
As per auction rules, banks and non-bank financial entities’ bids are processed by a CBI brokerage and sent to the Economy Ministry for approval. The brokerage settles the payment in one working day.
The CBI said it will hold the next auction on June 30 at which bonds valued at 65.5 trillion rials ($335 million) are to be offered.
Apart from banks, other buyers of the bonds include investment funds, insurance companies and government creditors, such as the Social Security Organization, Iran’s largest pension fund, as well as contractors of development projects.
The government has sold 170 trillion rials in bonds via the CBI since the initiative in May. Raising funds through the debt market is critical for the government saddled with deep budget holes that have become bigger due to high and rising cost of imports, tough US economic sanctions, near total loss of oil export revenue and decline in tax income.
Economy Minister Farhad Dejpasand said earlier in the month that “the government may not be able to realize 1,400 trillion rials ($7.1 billion) of its revenue projected in the March 2020-21 budget.” The government expects to make 1,000 trillion rials ($5.1 billion) from bond sales.
Apart from the amount permitted in the budget, the government wants to secure approval for an additional 1,500 trillion rials from the High Economic Coordination Council -- an ad hoc economic decision-making body comprising the heads of the three branches of power -- to fix the gaping budget hole.
