The lowest bond sale was recorded Tuesday in the past three weeks during the weekly auction held by the Central Bank of Iran.
Out of the 76.7 trillion rials ($300 million) bonds on offer, investors bought 2.5 trillion rials ($10m), 88% less than the week before.
Bonds are part of the government policy to raise funds for huge budgetary needs as it struggles with historic deficits due to the 2018 US economic sanctions.
According to data posted on the CBI website, bonds were purchased by retail and institutional investors at the stock market. Banks and credit institutions refused to partake in the auction for the fourth straight week.
Observers ascribe lenders aversion to the debt market to the shortage of liquidity despite the fact that banks are required to allocate a portion of their money 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 at the CBI’s open market operations and by extension control the supply of money at interbank market.
To appease investors, the government during the recent auctions has shortened the maturity date of bonds to less than two years and maximum two years. Most bonds sold in previous auctions mature over three years.
Since May 2021, the CBI has generated 836 trillion rials ($3.2 billion) from bonds during 35 weekly auctions and deposited the money with the treasury to fund the budget deficits.
The government will hold the last auction in the outgoing calendar year that ends on March 20 next week and offer 59 trillion rials ($230m).
The CBI has welcomed bond sale to cover budget deficit needs, saying that it is a safer option than the government borrowing from it. Resorting to the debt market helps in controlling hyperinflation arising from the deep and unending budget deficits.
