The government sold 22.5 trillion rials ($88 million) in bonds at the weekly auction on Tuesday -- up 15% compared to the previous week sale.
As per a press release posted on the Central Bank of Iran website, four banks put in bids collectively worth 7.8 trillion rials. The bids were approved by the Economy Ministry.
Bonds were sold at 21.5% for and 20.5%, respectively for three and two years maturity dates. The remaining were sold to retail and institutional traders. Bond auctions were largely ignored in the seven weeks but investors have shown renewed interest in the past three weeks.
The government sold bonds worth a total of 100 trillion rials ($400m) in the past three weeks. Prior to that it sold less than 5 trillion rials on average for seven consecutive weeks.
Starting in May, the auctions are held to raise funds to help the government plug its budget deficits. Buyers were initially banks and investment funds but later the Ministry of Economy extended the bond trade to stock market to enable retail and institutional investors to take part.
To encourage investors the Economy Ministry last month allowed equity market investors to buy bonds throughout trading week. Prior to that investors could buy bonds only one day in a week (Tuesdays) when the weekly auctions are held.
The government has put up bonds worth 70 trillion rials ($280m) for next week’s auction on Dec. 15.
Grappling with unprecedented budgetary challenges, the Rouhani administration had pinned high hopes on the debt market. Experts say the government needs a minimum 50 trillion rials a week to pay its bills.
So far the government has generated more than 800 trillion rials ($3.2 billion) in 29 weekly bond offers. Experts say it needs to sell at additional 500 trillion rials in the remaining weeks before the fiscal year is out.
