The government sold bonds worth 5.8 trillion rials ($23 million) at the weekly auction held by the Central Bank of Iran on Tuesday.
Buyers were mainly from interbank market while investors in the stock market playing a peripheral role, according to a CBI press release.
An unnamed bank was the sole buyer that put in a bid worth 5.6 trillion rials. The bonds mature in October 2022 at 21%. There were no buyers for bonds with longer maturities.
In the auctions investors must put in bids for a minimum of 500 bonds each at par value of 1,000 rials via the interbank platform managed by the CBI as well as the trade platform of the Tehran Securities Exchange Technology Management Company.
Bonds worth 197.5 trillion rials ($790 million) will be offered next week maturing in July 2023 and June 2024, the CBI said.
The bond sales help the government plug its budget deficits. As opposed to the successful experience in the last fiscal year, this year the government is facing big challenges raising funds from the debt market.
So far it has managed to sell 50 trillion rials ($198 million) in debt in seven auctions that started in May of last year. The figure is insignificant because the gaping deficit hole is in the region of 3,200 trillion rials ($12.8 billion) for fiscal 2021-22.
The government has resorted to the debt market for deficit spending instead of borrowing from the CBI, which was an ill-advised practice and one of the main reasons behind the exploding money supply and galloping inflation in the past.
Bond auctions stated in May 2020 when banks, investment funds and stock market investors were asked by the government to partake. Last year the government held 42 auctions and generated 1,257 trillion rials ($5.4 billion).
