The government generated 30.1 trillion rials ($97 million) in the second round of weekly bond auction held by the Central Bank of Iran on Tuesday.
The auctions are held by CBI on behalf of the Economy Ministry to raise funds for the government’s budget deficits.
Buyers of the government bonds are usually banks, non-bank credit institutions, investment funds and institutional investors in the stock market.
Unlike lenders’ absenteeism in the first round, both banks and institutional investors actively took part in the second round.
Six banks placed bids worth 38.5 trillion rials ($124 million), but the Economy Ministry accepted only 17.9 trillion rials ($55 million) worth of the bids, according to data released on CBI’s website.
Retail and institutional investors purchased 12.2 trillion rials ($39 million) worth of bonds offered in the capital market.
The Economy Ministry raised the yield up to 22% for bonds that mature in August 2024. The rate for one-year maturity bonds was 21.5%.
Data show that banks were interested in bonds with a shorter maturity and lower yield, whereas institutional investors mainly purchased bonds with higher yields.
CBI said it will hold the next auction on June 7 and offer bonds worth 25.2 trillion rials ($81 million).
As per the procedure, investors must place bids for a minimum of 500,000 bonds each at par value of 1000 rials ($0.004) via the interbank auction platform managed by CBI and the trade platform of the Tehran Securities Exchange Technology Management Company.
Weekly bond auctions started in May 2020 when banks and investment funds were compelled to allocate a significant portion of their resources to buying government bonds. Later, institutional investors and retail traders in the stock market participated.
In the last fiscal year (ended March 20, 2022), the government held 36 bond auctions and earned 906 trillion rials ($3 billion), down 27% from sales in the previous fiscal year.
The new round of bond sale will be in line with the provisions of the fiscal budget law, in which the government is allowed to sell 860 trillion rials ($2.8b) worth of bonds until the current fiscal yearend (March 2023).
