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EghtesadOnline: Bond sale by the government was around 13 trillion rials ($43.3 million) in the last Iranian week – down 43% on the week before.

Bond auctions are held every week to help plug the government’s budget deficits. The main buyers are banks, non-bank credit institutions, investment funds and institutional investors in the stock market.

According to data published by the Economy Ministry, lenders in the interbank market and stock investors each contributed to half of the debt offer. 

Bonds worth 6.7 trillion rials were purchased by banks and investors of fixed income assets took 6.2 trillion rials. 

The government so far has generated 374.6 trillion rials ($1.2 billion) in 16 auctions. Banks and credit institutions accounted for about 36% of the total while capital market investors took the rest. 

The ministry said it will hold the next auction on Tuesday and offer debt to the tune of 49.3 trillion rials ($164m). 

In addition to weekly bond offers, the ministry said that the government has sold treasury bills 350 trillion rials ($1.2b) since the beginning of the fiscal year in March. Treasury bills are underwritten and given to government contractors in lieu of unpaid bills.

The government plans to sell bonds worth 393 trillion rials ($1.3b) by March 2023. The sales are in line with provisions of the 2022-23 budget in which the government is allowed to sell 860 trillion rials ($2.8b) bonds. 

The government says the debt offers have helped cover the budget deficit to a considerable degree and by extension  avoid borrowing from the Central Bank of Iran that in the past fueled inflation by pushing up the monetary base.

Bond Auction Gov’t Bonds