The government's weekly bond sale was held on Tuesday with banks returning to the auction after staying away for almost two months.
Debt worth 15.75 trillion rials ($43.17 million) was sold in the 25th auction held by the Central Bank of Iran 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.
Banks and credit institutions ended their absence this time around but their role was insignificant – hardly 480 billion rials ($1.3 million). This is while equity market investors bought 15.28 trillion rials ($41.8 million).
The shortest maturity date was June 2023 with the ministry setting a maximum 22.53% interest for bonds maturing in June 2024. The rate for short-term debt was 22.32%.
Banks usually prefer short-term debt that have lower yields while institutional investors are more inclined towards long-term with higher yields.
Debt worth 52.848 trillion rials ($144.7 million) was sold in the 24th auction and was purchased by equity market investors and underwriters.
The ministry said it will hold the next auction on Nov. 15 and offer 77.87 trillion rials ($213.3m). The shortest maturity date for the next auction is May 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, 606.739 trillion rials ($1.66 billion) bonds have been sold in 25 auctions so far.
In addition to bonds, the government has sold treasury bills worth 350 trillion rials ($958.9m) 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 can offer 860 trillion rials ($2.8b) bonds by next March.
Earlier the ministry said that it paid the principal and interest on bonds worth 1,149.9 trillion rials ($3.15 billion) up until Nov 8.
More than 901.57 trillion rials ($2.47 billion) was the principal and 248.3 trillion rials ($680.3 million) interest. The bond money was over and above government income from debt sold this year.
