CBI's Weekly Bond Sale at $120m

EghtesadOnline: During the latest round of bond auctions held by the Central Bank of Iran this week, the government sold bonds worth 30.3 trillion ($121 million).

News ID: ۷۸۶۱۷۱

05 March 2021

This week's auction featured a bigger participation of institutional and retail investors in the stock market, as they bought almost half of the bonds.

At the interbank market, four banks and credit institutions, and three financial entities, including investment funds, put in bids worth 18.7 trillion rials ($74 million). Only four bids worth 15.8 trillion rials ($63 million) were approved by the Economy Ministry.

In line with measures to help the government plug its deepening budget deficits, the bond auctions initiated last May. With the current fiscal year drawing to an end in two weeks, the government struggles to acquire more from debt market in the short period. It has put up for sale bonds worth 237 trillion rials ($950 million) in the next auction on March 9.

The central bank has so far held 40 auctions and generated close to 1,140 trillion rials ($4.5 billion). Banks and investment funds contributed to 52% of the amount while 48% of the bonds were bought through stock market.

The government has also sold treasury bills worth 517 trillion rials ($2.6 billion) since last March, according to data released by the Economy Ministry's news portal, Shada.ir.

Bonds have reportedly helped cover the budget deficit to a considerable degree and restrain government borrowing from CBI that fueled inflation by increasing the monetary base.

Banks have been asked to hold enough bonds to be able to operate in the interbank market and borrow from CBI under the newly-launched open market operation policy.

CBI has asked banks to buy bonds to be eligible to borrow. The Money and Credit Council, the top monetary decision-making body, has obliged lenders to allocate at least 3% of their financial resources to bonds.