The government sold 20.3 trillion rials ($88 million) in bonds at the weekly auction on Tuesday held by the Central Bank of Iran.
Earnings improved compared to the previous sale by 150% when it was 8.2 trillion rials, the CBI website reported.
Almost half of bonds were bought by banks and credit institutions that put in bids worth 9.5 trillion rials for two-year bonds at 20.5%.
The rest of the bonds were sold to retail and institutional traders in the stock market where yields were as high as 21.5% for three-year maturity.
Starting in May, the auctions are among government measures to help plug its deepening budget deficits and were relatively successful in the first several rounds but plunged sharply with the start of autumn.
So far the CBI has held 35 auctions and generated close to 1,000 trillion rials ($4.3 billion) with average yields at 20%. The CBI said it will offer 83 trillion rials ($360m) at the next auction on Feb. 2.
More than 53% of buyers in the past nine months were banks and investment funds and the rest stock investors.
The government has also sold treasury bills worth 497 trillion rials ($2.2b) since last March. There are plans to generate 1,250 trillion rials ($5.5b) from bonds besides selling treasury bills as mentioned in the fiscal March 2020-21 budget.
Bonds have reportedly helped cover the budget deficit to a considerable degree and helped restrain government borrowing from the CBI that fueled inflation by increasing the monetary base.
Banks have been asked to hold enough bonds to be able to operate in the interbank market and borrow from the CBI under the newly launched open market operation policy.
The CBI has asked banks to buy bonds to be eligible to borrow. The Money and Credit Council, the top monetary decision-making body, has obliged lenders to allocate at least 3% of their financial resources to bonds.
