CBI directive to take down on Iran Debt Market!
– Just the other day, Central Bank of Iran put a directive into effect allowing banks to issue 20% (Per annum) certificate of deposits which eventually affected Iran Debt Market. Aiming to stabilize the FX market, CBI directive caused a plunge in debt securities’, specifically Islamic Treasury Bills, prices, ended for almost all of the YTMs to hike over 20%. Analysts believed, considering the benefits of higher rates on Iran Debt Market contrary to banking sector, only by absorbing the free money streams by the capital market, rate jumps would have lesser inflation effect on the nation’s economy. Below table shows the latest status of Islamic Treasuries with highest yields as of Feb 17, 2018.
– Iranian parliament granted the administration its consent with regards to issuance of IRR 95,000 bn (cUSD 2,043 mn) worth Islamic Treasury Bills with maturity of 3 years for repayment of government liabilities to Agriculture and Healthcare sectors. 50% of said value will be allocated to guaranteed purchase of strategic agricultural products and capital assets acquisition plans while the other half is to settle the long overdue state payments for health insurance organization. In this vein, tomorrow a new issue of ITBs worth IRR 17,000 bn (cUSD 365.6 mn) is to be publically offered on Iran Fara Bourse. Although, following the unsuccessful IPO of yesterday’s ITBs, there are doubts on whether all these issues can be priced accordingly eyeing the current yield rates situation or not.
– After a decade of operation, for the first time the value of physical and financial trades of Iran Mercantile Exchange in a 11-month period starting March 21, 2017 until today, reached IRR 1,013,032,480 bn (cUSD 21,785.64 bn) recording a 37% rise contrary to the same period previous year (IRR 739,422.640 bn). Derivative trades like futures and options are on the top list of financial trades with a value of IRR 563,800,000 bn.
A tick down for today!
In the Market
Stocks lost their weekly gains after consecutive session finishing today in medium red. Tehran Stock Exchange slipped for (-0.13%) and stood on 98,300.65 while IFEX also ended the day lower on 1,099 (-0.24%). Turbulence over banking risk free yields along with uncertainties on global markets are there to blame for weaker than expected performance of markets today.
Equities rose steadily throughout the morning, but reversed course in soon enough after following rumor that CBI may raise the risk free rates to 25%. While there were official denials in this regard, market practitioners chose to be safe than sorry. 8 out of 12 sectors finished today’s session in the red as the medium-weighted Auto (-1.19%) sector along with heavily-weighted Metals (-0.66%) group led the movement.
Conversely, Oil Products (+0.76%) ended the day in good green after better than expected Q4 profit estimates.
In the debt market, Islamic Treasuries ended the day on a flat note after huge sale pressure of the other session. The yield on the benchmark 1-year Treasury bills slipped to be around 18.5%, while the government Sukuk Ijara could not retreat all the price losses from previous session with ended in YTMs of more than 21%.
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