The government sold 32.5 trillion rials ($104 million) bonds at the seventh weekly auction held by Central Bank of Iran last week.
Bond auctions are held to help plug the government’s budget deficits. The main buyers are banks, non-bank credit institutions, investment funds and institutional investors in the stock market. The CBI holds the auctions on behalf of the Economy Ministry.
In the latest auction the main buyers were retail and institutional investors in the bourse while banks had a comparably peripheral role.
According to data published on the CBI website, equities market investors bought 25.6 trillion rials ($82.5m) bonds including 11.8 trillion rials in short-term bonds and 13.8 trillion rials in long-term debt.
Two banks put in bids worth 6.8 trillion rials ($41.6m), almost half in the previous auction. Like most past auctions, banks opted for bonds with the nearest maturity and the lowest yields.
The shortest maturity term was 15 months due in September 2023. The Economy Ministry set maximum 22% for bonds maturing in October 2024. The rate for 15-month maturity was 21.5%.
Compiling auction data since its inception in May, 192 trillion rials ($620m) has been sold in seven auctions.
Lenders accounted for about 38% of the total bonds and contribution from capital market investors stood at 62%, the Economy Ministry said.
Treasury bonds to the tune of 150 trillion rials ($490m) have been sold since the beginning of the current fiscal in late March. Treasury bills are underwritten and given to government contractors for unpaid debt.
The CBI said it will hold the next auction on July 12 and offer 101 trillion rials ($325m) in new debt.
As per rocedures, 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 as well as the trade platform of the Tehran Securities Exchange Technology Management Company.
The bond sales are in line with provisions of the 2022-23 budget in which the government can sell 860 trillion rials ($2.7b) bonds by March 2023.
