Govt raises Rs454bn via PIBs auction, exceeds target

KARACHI: The government raised Rs454 billion from the auction of fixed-rate Pakistan Investment Bonds (PIBs) on Wednesday, surpassing the target of Rs350 billion, with yields decreasing across all tenors.

The cut-off yield on a two-year PIB fell by 25 basis points (bps) to 11.69 per cent. Meanwhile, the yield on the three-year bond remained unchanged at 11.889 per cent. The yield on the five-year bond fell by 1bps to 12.389 per cent, and the yield on the 10-year bond also dropped by 1bps to 12.79 per cent.

Analysts noted that the slight decline in yields during the latest PIB auction suggests that Pakistan’s central bank will remain cautious and is likely to deliver a moderate rate cut at the upcoming monetary policy meeting scheduled for March 10.

Last month, the State Bank of Pakistan (SBP) reduced its key interest rate by 100 bps to 12 per cent in response to declining inflation.In January, Pakistan’s consumer inflation rate dropped to 2.4 per cent year-over-year (YoY), the lowest level in over nine years, compared with 4.1 per cent in the previous month. Analysts anticipate that inflation will continue to slow down, potentially dropping below 2.0 per cent in February.