The government sold 22.4 trillion rials ($86 million) bonds in the last auction held by the Central Bank of Iran on Tuesday.
Bonds were purchased mainly by retail and institutional investors in the bourse. Banks and credit institutions were absent for the third straight week.
Capital market investors bought 20.4 trillion while a bank made a meager contribution buying 2 trillion rials.
Selling debt is part of government policy to raise funds for its budgetary needs as it struggles with a ballooning deficit due to the 2018 US economic sanctions imposed by the former president Donald Trump.
To appease investors, the government has shortened the maturity date of bonds to less than two years and maximum two years in the past two auctions. Most bonds sold in the past mature in three years.
Observers ascribe banks’ aversion to the primary debt market to shortage of liquidity despite the fact that they are required to allocate a portion of their financial resources to bonds.
Earlier the Money and Credit Council, the top monetary decision-making body, obliged banks to allocate at least 3% of their funds to bonds issued by the government with the aim to involve them in the CBI open market operations and control supply of money in the interbank market.
The CBI on behalf of the government has held 34 weekly bond auctions since May 2021 and generated 835 trillion rials ($3.2 billion).
For the auction next week, 76.7 trillion rials ($295m) bonds will be offered, the CBI said.
Bonds are a big piece of the government’s economic roadmap for the next fiscal year that starts on March 21. As per the 2022-23 budget bill, the government can sell bonds worth 860 trillion rials ($3.3b).
