The government sold 71 trillion rials ($240 million) in bonds during the weekly auction held by the Central Bank of Iran.
Unlike the past two rounds, banks made a bigger contribution but institutional equity traders dominated in the primary debt market.
Three lenders partook in the bond sale, putting bids worth 19.6 trillion rials ($65m), the CBI website said.
Stock market investors, including mutual funds, underwriters and retail traders, bought 51.5 trillion rials ($171m) of the debt, recording the biggest contribution in the third quarter that ends on Dec 21.
Bond offer this week was the second biggest in the Q3 where more than 70% of the total 102 trillion rials ($340m) was bought.
Yield on bonds with longer maturity periods was 0.1 percentage point shy of 22%, the highest rate the Economy Ministry has so far offered. Bonds maturing in Oct 2022 and Oct 2023 bear 21.5% and 21.7%, respectively.
Next week the CBI is to 26.7 trillion rials ($89m).
Bond sale is part of the government’s policy to raise funds for huge budgetary needs as it struggles with a ballooning deficit due to the 2018 US economic sanctions.
On behalf of the Economy Ministry, the CBI is in charge of selling bonds to banks and credit institutions in the interbank market as well as equity exchange market investors.
Earlier in the month, the ministry said it would offer 400 trillion rials ($1.3 billion) in new debt by in the remaining weeks of the current fiscal year that ends in March.
It is of the opinion that the government can generate 100 trillion rials ($333m) from bonds on a monthly basis.
The government generated 600 trillion rials ($2b) in less than nine months since the beginning of current fiscal year.
Apart from bonds, the government made 810 trillion rials ($2.7b) from treasury bills in the present fiscal year.
Selling bonds to cover budget deficits is seen as a safer option by economists who say it helps in controlling the chronic inflation arising from budget deficits.
However, the bond policy has its own critiques. A group of economists say selling debt should be a temporary solution and the government cannot, and should not, depend only on bond offers.
They insist that selling debt is nothing more than postponing governments’ mountain of unmet financial commitments to the unknown future.
