The Economy Ministry said Sunday that equity market investors can henceforth buy Islamic bonds issued by the government throughout the trading week.
In the past investors could buy bonds only one day in a week, usually Tuesdays, when the regular weekly bond auctions are held by the Central Bank of Iran.
"The move is line with measures to finance government spending via bonds and improve the participation of investors," the ministry website shada.ir said.
The decision came after the government failed to find buyers for bonds it offered at the auctions to raise funds for the mounting budget deficits. This has led to new concern that the government may approach the central bank for funds if it cannot the bonds as intended.
Auctions are held every week since May where the CBI, on behalf of the government, sells bonds to banks, investment funds and retail investors in the bourse.
Despite success in the first few auctions, sales plunged sharply in the last seven weeks. The government hardly sold an average 4.2 trillion rials ($15 million) in bonds in the past seven weeks. Prior to that, average weekly sale was 40 trillion rials ($148m).
So far the Rouhani administration has generated 730 trillion rials ($2.7 billion) in 24 bond offers. Experts say it needs to sell an additional 520 trillion rials in the weeks before the fiscal year is out in March.
Low yield on bonds and high inflation expectations are seen as the main reasons behind the aversion to invest in fixed income assets.
The government has said it will continue to sell debt throughout the fiscal year. According to Mehdi Banani, head of the debt management department of the Economy Ministry, there are plans to sell at least another 620 trillion rials ($2.2b) until late March.
Caption: In the past investors could buy bonds only one day in a week, usually Tuesdays.
