The Securities and Exchange Organization, Iran’s stock market regulator, has allowed holding companies and investment firms to sell bonds to raise funds.
Funds will be injected in the share market to help revive the market hit hard by selloff and capital outflow, the Securities and Exchange News Agency reported.
The decision was made after a meeting between capital market authorities, mangers of investment firms and holding companies on Monday.
Talking on the sidelines of the meeting, SEO’s managing director, Mohammad Ali Dehqan-Dehnavi said investment companies at the meeting agreed to issue bonds worth 240 trillion rials ($960 million).
He said the regulator had eased restrictions limiting companies wanting to issue bonds. “All segments of the regulatory body are obliged to remove hurdles and facilitate capital inflow to stock market within the next 24 hours,” he was quoted as saying.
The regulator will issue agreement in principle for companies wanting to issue bonds, said Dehqan-Dehnavi, adding that earnings from bonds will be gradually invested in stocks.
“To ensure that the resources are invested in stocks, the amounts will be injected in phases,” he said.
The new measure is in line with efforts to prop up the sagging share market, which went into a tailspin in August 2020, following historic gains in the first few months of the previous fiscal year.
Ever since, the regulator took several supportive measures to prop up the bearish market, but apparently to no avail.
Green lighting investment funds to issue bonds appears to be the regulator’s last resort to rescue the collapsed market in dire need of liquidity. The SEO has always been averse to private companies’ operation in the debt market long dominated by the government and its companies.
Iran’s bond market growth was exponential in the previous fiscal year thanks to government moves to tap debt instruments to cover its ballooning budget deficits. The market size was estimated at 2,860 trillion rials ($11.4 billion) by end of the calendar month to February 18.
A glance at the composition of participants in the market indicates government dominance. A total of 1,400 trillion rials ($5.6b) in bonds were issued, of which 1,300 trillion rials belonged to the government.
Corporate bonds issued by private firms and participatory bonds issued by municipalities had a meager share, accounting for 92 trillion rials and 7 trillion rials, respectively.
