The government sold 21.3 trillion rials ($66 million) bonds in the latest auction held by the Central Bank of Iran on Tuesday.
The auctions are held on a weekly basis to raise funds for the government’s budget deficits. Banks, non-bank credit institutions, investment funds and institutional investors in share market are usually the main buyers of the bonds. The CBI holds auctions on behalf of the Economy Ministry.
Despite bigger contribution of banks and credit institutions in the fourth auction, the total bond sale was down 32% compared with the session before, according to the CBI website.
Bidders were three banks who put in bids worth 22.4 trillion rials but the Economy Ministry accepted 12.7 trillion rials ($39.6m).
Lenders were interested in the low-yield but short-term bonds that mature in September 2023. The ministry set a maximum 22% for bonds maturing October 2024. The rate for 14-month maturity bonds was 21.5%.
Retail and institutional investors in the capital market purchased 8.6 trillion rials ($26.7m) bonds.
According to data released by the Economy Ministry, bonds worth 111.56 trillion rials ($348m) were sold during the four recent auctions that started in May.
Islamic Treasury Bonds valued 150 trillion rials ($468m) were issued since the beginning of the current fiscal in March. Treasury bills are underwritten and given to government contractors in lieu of unpaid bills.
The CBI said it will hold the next auction on June 21 and offer 184.7 trillion rials ($577m) in new debt.
As per procedures, investors must put in bids for a minimum of 500,000 bonds each at par value of 1000 rials ($0.004) via the interbank auction platform managed by the CBI plus the trade platform of the Tehran Securities Exchange Technology Management Company.
Weekly bond auctions started in May 2020 when banks and investment funds were told to allocate a significant portion of their resources to government bonds. Later institutional investors and retail traders in the stock market joined.
