The government bond offer was welcomed by stock market investors on Tuesday after two consecutive unsuccessful weeks wherein the main buyers (banks and institutional investors) stayed away.
Debt worth 52.848 trillion rials ($153.4 million) was sold in the 24th weekly auction held by the Central Bank of Iran.
Auctions are held by CBI on behalf of the Economy Ministry to raise funds for the government’s budget deficits.
Buyers of the debt normally are banks, credit institutions, investment funds and institutional investors.
In the absence of banks and credit institutions for the fourth week in a row, equity market investors bought 37.848 trillion rials ($109.8 million) bonds.
The shortest maturity date was June 2024 with the ministry setting a maximum 22.53% for bonds maturing June 2025. The rate for short-term debt was 22.20%.
Underwriters bought 15 trillion rials ($43.5 million) bonds in the auction last week. Reports said 69.13 trillion rials ($200.7m) in new debt was offered on Tuesday.
Banks usually prefer short-term debt that have lower yields while institutional investors are more inclined towards long-term with higher yields.
The bond sale last week hardly made 7.83 trillion rials ($22.7m).
The ministry said it will hold the next auction on Nov. 8 and offer 64.33 trillion rials ($186.7m). The shortest maturity date for the next auction will be June 2023 apparently to induce buyers.
Weekly auctions started in May 2020 when banks and investment funds were instructed by the CBI to allocate a part of their resources to buy government debt. Later, institutional investors and retail traders in the stock market joined.
According to ministry data, 590.98 trillion rials ($1.715 billion) bonds have been sold in 24 auctions since March.
In addition to bonds, the government sold treasury bills worth 350 trillion rials ($1.01b) so far this year. Treasury bills are underwritten and given to contractors in lieu of unpaid bills.
In the last fiscal year the CBI held 36 auctions generating 906 trillion rials ($3b), down 27% from the year before.
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.
The ministry said that it paid the principal and interest on bonds worth 1,095.3 trillion rials ($3.18 billion) up until Nov 2.
More than 951 trillion rials ($2.76 billion) was the principal and 243.6 trillion rials ($707.3 million) interest. The bond money was over and above government income from new debt offered this year.
