The government sold 36.6 trillion rials ($126 million) bonds in the last weekly auction held on Tuesday. Banks, non-bank credit institutions, investment funds and institutional investors in the stock market were the main buyers.
Unlike last week, contribution of banks to the bond purchase was insignificant in the 14th weekly auction while fixed income investors were the main buyers.
Bonds bought by retail and institutional buyers were 31.5 trillion rials ($108.6 million) and one bank purchased the rest, the Central Bank of Iran reported.
As has become the norm, banks opt for short-term bonds maturing in October 2023 while stock market investors prefer high-yield bonds maturing longer.
Despite obligations imposed by the CBI to allocate a percentage of financial resources to bonds, the share of banks in the bond market has been markedly lower compared to other investors.
The government generated 338.65 trillion rials ($1.16 billion) in 14 auctions. Banks and credit institutions accounted for about 35% of the total while capital market investors took the rest.
The CBI said it will hold the next auction on Tuesday and offer 86.8 trillion rials ($300m) bonds.
In addition to bonds, the ministry said that the government has sold treasury bills 350 trillion rials ($1.2b) since the beginning of the calendar year in March. Treasury bills are underwritten and given to government contractors in lieu of unpaid bills.
The government plans to sell an additional 393 trillion rials ($1.35b) bonds by March 2023. Bond sales are in line with provisions of the 2022-23 budget in which the government is allowed to sell 860 trillion rials ($2.8b) bonds over one year.
The government says bond sale has helped it cover the blooming budget deficit to a considerable degree and thus avoid borrowing from the CBI that in the past fueled inflation by increased the monetary base.
