Buyers at the interbank market were two banks and credit institutions, which placed bids worth 3.5 trillion rials ($13.7 million), which was significantly lower than 16 trillion rials (62.7 million) in bond sale at the interbank market last week.
This week's auction featured a larger number of retail and institutional investors in stock market to the bond sale, as they bought 19.3 trillion rials ($75 million) in bonds. The share of retail and institutional investors was zero in the previous auction.
Underwriters were the next buyers. As per CBI data, security underwriters bought bonds worth 8 trillion rials ($31.6 million).
Bonds on offer totaled 67 trillion rials ($262 million) with yields ranging from 20.5% to 21.5% for two- and three-year maturities.
CBI said it will offer 42.4 trillion rials ($166 million) in the next auction on Feb. 16.
Starting last May, the auctions are among government measures to help plug its deepening budget deficits, which has been relatively successful.
So far, CBI has held 37 auctions and generated close to 1,060 trillion rials ($4.15 billion).
According to estimates published by the Persian-language economic website Eghtesadnews, the government has to sell bonds worth at least 40 trillion rials ($156 million) on a weekly basis before the current fiscal year ends on March 20 to cover a 180-trillion-rial ($705 million) budget deficit.
Earlier in the month, CBI Governor Abdolnasser Hemmati hailed the role of regular bond auctions in curbing the growth of ballooning money supply by reducing government dependence on the central bank for credit.
"If it was not for bonds, the money supply would have expanded by an additional 5,600 trillion rials [$22 billion]," he said, addressing members of Fars Chamber of Commerce.
Oil Salaf Bonds Planned
CBI on its website announced a plan for offering standard salaf contracts backed by crude oil for the first time on Feb. 16.
The oil salaf contract put up for sale is worth 50 trillion rials ($196 million), 20 trillion of which are to mature in two years and the reset will mature in three years.
A standard salaf is an Islamic contract similar to futures, with the difference being that the total price should be paid in advance.
According to CBI, the Salaf bonds can be traded in put and call option contracts. A call option gives the holder the right to buy a security and a put option gives the holder the right to sell it.
In August, the government announced a highly controversial plan to presell 220 million barrels of crude oil to the people during a course of one year using parallel salaf contracts.
The plan was in limbo after criticism mounted against the government over the scheme's potential to leave piles of debts for successive governments.