Gov't Earns $430m in Crunch Time Bond Sale

Bond sale in the final week of the current fiscal year hit a record and enabled the government to realize its goal to generate 1,250 trillion rials ($5 billion) by selling debt.  
The government sold bonds worth 107.5 trillion rials ($430 million) during the latest auction held Tuesday by the Central Bank of Iran. Value of sale was the highest in the 42 auctions held since May 2020 to raise funds for government budget deficits.  
To whet investor appetite, the CBI raised yields up to 22.7% from average 19.4% in the recent past, according to a press release seen on the CBI website.   
Bidders in the interbank market were four banks that put in bids worth 32.4 trillion rials ($129.6m). Retail and institutional investors in the bourse bought 32 trillion rials in debt while 43 trillion rials were bought by security underwriters.  
The CBI said the initiative to sell government bonds was "in line with provisions of the budget and decisions made by the Supreme Council of Economic Coordination."  The top council is an ad hoc economic decision-making body chaired by the heads of the three branches of power. 
"Investors bought bonds worth 1,257.4 trillion rials [$5b] in 42 auctions," the CBI said. Banks bought 50% of the total. Investment funds, insurance companies, government creditors, namely contractors of development projects, and stock market investors were among the buyers. 
Economists say funding budget deficits via the bond market is a safer option than the government borrowing from the central bank, which runs the risk of expansion of monetary base. 
Addressing the 60th CBI General Assembly on Tuesday, the CBI boss Abdolnasser Hemmati said the bond sales helped the economy escape the risk of hyperinflation arising from rising monetary base and money supply.
Minus the bond sales “the monetary base would rise by 32 percentage points and money supply would increase 26 percentage points. The CBI did not let this happen,” he told the meeting.
Money supply reached 31,300.2 trillion ($125.2b) at the end of third quarter of the current fiscal year on Dec. 20 -- up 38.4% year-on-year. The monetary base jumped to 4,075.4 trillion rials ($16.3b) in the period up 29.7% annually.