The government generated 284 billion rials ($896,000) in the last weekly bond auction held by the Central Bank of Iran on Tuesday.
Auctions are held by CBI on behalf of the Economy Ministry to raise funds for the government’s budget deficits.
Buyers of government debt usually are banks, non-bank credit institutions, investment funds and institutional investors in the stock market.
In the absence of banks and credit institutions, equity market investors bought 284 billion rials ($896,000) bonds including 48 billion rials short-term bonds and 23.5 billion rials long-term debt
The shortest maturity term is due in June 2024. The Economy Ministry set a maximum 22.01% for bonds maturing in June 2025. The rate for shorter maturity was 21.8%.
The ministry sold 50.3 trillion rials ($158 million) bonds in the previous last week, the highest in the current fiscal year that started in March. Unlike this week, two banks (not named) were among bidders this time in the interbank market putting up bids worth 23.2 trillion rials ($70m),
Data show that banks prefer debt with shorter maturity and lower yield, whereas institutional investors go for bonds with higher yields.
The ministry said it will hold the next auction on October 4, and offer 66.96 trillion rials ($211m) in new debt.
Weekly bond auctions started in May 2020 when banks and investment funds were compelled to allocate a part of their resources to buy government bonds. Later, institutional investors and retail traders in the stock market participated.
According to ministry data, 503.3 trillion rials ($1.58 billion) bonds were sold in 19 auctions.
In addition to bonds, the government has offered treasury bills worth 350 trillion rials ($1.11b) since March. Treasury bills are underwritten and given to government contractors in lieu of unpaid bills.
In the last fiscal year (ended in March), the government held 36 bond auctions and earned 906 trillion rials ($3 billion), down 27% from the previous fiscal year.
Debt is offered in line with the provisions of the 2022-23 budget in which the government is allowed to sell 860 trillion rials ($2.8b) bonds by next March.
