The CEO of the Central Asset Management Company, speaking to Iran’s Capital Market News Agency (Sena), stated that government financing through the capital market can serve multiple functions in the national economy. These include transparency in the volume and rate of financing, oversight enabled by the approval of bond issuance limits in budget laws and other overarching regulations, the facilitation of open market operations, regulation of the interbank market, market-based determination of rates, and signaling for other financing rates.
Ali Bigzadeh emphasized that the development of the debt market is a prerequisite for the sustainable growth of Iran’s capital market. He noted that significant developmental steps have been taken in this regard in recent years, including the issuance of bonds based on credit ratings and the design of various bond types tailored to the financing needs of different industries.
Highlighting the government’s pivotal role in facilitating private sector financing through bonds as a cornerstone of developmental policies, Bigzadeh explained that, in other countries, government financial sectors—such as treasuries and central bank units responsible for open market operations—play a significant role in the debt securities market. Through these instruments, governments not only secure financing but also shape interest rate policies. Consequently, governments are key players in the fixed-income securities market.
Addressing the question of whether government bond issuance negatively impacts the stock market, the former head of the primary market clarified that participants in the bond and stock markets differ in their risk tolerance. Therefore, the issuance of securities and stocks, or the growth of one market, does not directly or significantly affect the other. Moreover, bond market clients, primarily fixed-income funds, operate within defined parameters due to their inherent objectives, ensuring no disruption to the performance of either market.
Bigzadeh highlighted the positive impact of open market operations on the stock market, noting that if the Central Bank effectively utilizes open market operations and bond issuance, a reduction in interbank rates could lower the government’s financing costs. This, in turn, would positively influence the stock market.
According to this capital market expert, transparency is essential across all sectors of the economy. The issuance of bonds enhances transparency and streamlines the management of government debt. Undoubtedly, leveraging the transparent structure of the capital market for bond issuance enables oversight of the volume and rates of government financing by various stakeholders.
Bigzadeh further noted that the government has consistently met its obligations regarding the timely payment of principal and interest on bonds, significantly contributing to building trust among participants in the bond market.
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