Fixed income investors purchased 19.6 trillion rials ($63 million) bonds issued by the government at the fifth weekly bond auction.
Bond auctions are held every week to raise funds for the government’s budget deficits. Banks, non-bank credit institutions, investment funds and institutional investors in the share market are the main buyers. The CBI holds the auction on behalf of the Economy Ministry.
Banks and capital market investors contributed equally this time buying 9.8 trillion rials ($31.5m), according to data seen on the Central Bank of Iran website.
A bank was the sole buyer in the interbank market putting in a bid of 9.8 trillion rials, which was approved by the Economy Ministry.
Like most previous auctions, banks showed more interest in short-term bonds but with the lowest yields. The shortest maturity date was Sept 2023. The ministry set a maximum 22% rate for bonds maturing Oct 2024 while for 15-month maturity date it was 21.5%.
Bonds purchased by retail and institutional investors from the capital market included 8 trillion rials in long-term bonds and 1.8 trillion rials in short-term debt.
According to data released by the ministry, 131 trillion rials ($422m) bonds were sold in five auctions that started in May. Banks accounted for 41% of the total bond purchase and capital market investors took the rest.
Treasury bonds worth 150 trillion rials ($468m) were issued since the beginning of the current fiscal in late 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 28 for 164.5 trillion rials ($530m) bonds.
In Iran 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.
The bond offers are in line with the budget law in which the government is allowed to sell 860 trillion rials ($2.7b) bonds by March 2023 when the calendar year ends.
