Ahmad Qalebani, the managing director of the National Iranian Oil Co. (NIOC), said the bond sale totaled 14 trillion rials ($1.14 billion at the new official rate of exchange). What’s more, he said it sold out in just two days.
Previously, the bond sale was to last six days and total 11.5 trillion rials ($940 million). But Qalebani said the Central Bank agreed to make 22 percent more bonds available when it was seen how popular they were with the public.
Oil officials earlier had acknowledged that a smaller bond sale back in November flopped when the interest rate was 17 percent. Officials lobbied to raise the yield to 20 percent, and Qalebani said that made all the difference.
The bonds were marketed as having an effective interest rate of 27 percent because the interest is not taxable.
However, the inflation rate is widely believed now to exceed even 27 percent , so the bonds would still be worth less on redemption, which contradicts the grand tales of immense sales being marketed by the NIOC.
The Central Bank has been stopped from publishing the monthly inflation rate. The last figure published by the Bank, for last November, gave inflation at 19.8 percent. But the economic daily Jahan-e Eqtesad later said the Statistical Center of Iran, which is now empowered to make the inflation calculations but not to publish them, put the rate at 24.8 percent over the previous 12 months and at 28.1 percent when compared to the same month of the previous year.
In recent weeks with the collapse of the rial, prices have been surging in the markets and real inflation is widely viewed as well above 40 percent. All of that would seem to make a successful sale of bonds at even 27 percent unlikely.
The bonds are to fund the continued development of the South Pars gasfield now that foreign investors have fled the project.
The 20 percent interest rate applies to bonds that are held the full four years to maturity.
Early redemption lowers the interest rate to 18 percent in the first year and 19.5 percent in the second year, according to Shana, the Oil Ministry’s news service.
Oil Minister Rostam Qasemi said the small number of investors who loyally bought the bonds last November carrying 17 percent interest would now see those bonds automatically upgraded to 20 percent.
The Oil Ministry has not said recently how much capital it requires to complete the South Pars development project, but is believed to be many billions more than the $1.14 billion the NIOC claims to have raised last week.