Bond sale by the government faltered this week as the main buyers, namely banks and institutional investors in the stock market opted out.
On behalf of the Economy Ministry, the Central Bank of Iran barely sold 1.67 trillion rials ($5.3 million) bonds this week.
According to data seen on the CBI website, the weekly bond sale plunged 95% on the week before and was the lowest sale since the weekly auctions started in May.
Bond auctions are held to help plug the government’s deepening budget deficit and the main buyers are banks, non-bank credit institutions, investment funds and institutional investors in bourse.
Unlike the earlier week, when sale boomed thanks to the role of banks, their role was zero this week. Bonds were purchased by fixed income investors.
Despite obligations imposed by the Central Bank of Iran to allocate a percentage of financial resources for bonds, the share of banks in the bond market has been lower compared to other investors.
The government generated 265.7 trillion rials ($857m) in 12 auctions. Banks and credit institutions accounted for about 39% of the total while capital market investors took the rest.
The ministry said that the government sold treasury bills worth 50 trillion rials ($161m) this week, putting the total treasury bills sold since the beginning of fiscal year at 350 trillion rials ($1.12b). Treasury bills are underwritten and given to government contractors in lieu of unpaid bills.
The CBI said it will hold the next auction on Tuesday and offer 82.9 trillion rials ($267m) bonds.
Bond sales are in line with provisions of the 2022-23 budget in which the government is allowed to sell 860 trillion rials ($2.7b) bonds by March 2023.
