Iran Issues $300 Million in State Treasury Bills

Iran announced that it will issue $300 million in state treasury bills, an Iranian alternative to sovereign debt that is sharia-law compliant. The bills are being issued well below their market value for the time being and are seen as a means of gauging interest in the opening Iranian market. The Iranian government has previously issued treasury bonds to contractors instead of paying them, and makes them available in the Fara Bourse, an over-the-counter market.

Another motivation for the issuance is the lack of liquidity in the Iranian market. Despite widespread optimism in relation to the nuclear deal, Iranian banks still face double-digit inflation, high interest rates and large amounts of bad debt. The treasury bond issuance, if successful, should provide the Iranian central bank with additional funds, enabling it to pay down some of its bad debt.

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