Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
October 31, 2019

Yields on PIBs fall across all tenors at auction


October 31, 2019

KARACHI: State Bank of Pakistan (SBP) on Wednesday set a cut-off yield of 11.35 percent on the benchmark 10-year Pakistan Investment Bond (PIB), down from 12.24 percent previously.

The SBP also set a cut-off yield of 11.6 percent on the five-year PIB, down from12.5 percent in the last auction on September 18. For the three-year bond, the cut-off yield was set at 11.8 percent. In the last auction, the cut-off yield on three- year PIBs was set at 12.95 percent.

The central bank said it sold a total of Rs101.913 billion worth of PIBs, after receiving bids worth about Rs365.19 billion. The central bank sold Rs40.677 billion, Rs30.312 billion and Rs30.924 billion worth of three-, five and 10-year papers respectively. However, bids were rejected in 20-year PIBs.

The SBP also sold Rs54.401 billion of 10-year floating rate PIB

Dealers said the auction was in line with the market expectations and yields fell on expectations of soft inflation numbers over medium to long-term period.

"The result is according to market expectations and the slight fall in cut-off yields does not come as a surprise," said a dealer at a local brokerage house.

The consumer price index inflation rose to 11.4 percent in September from 10.5 percent in August.

Analysts see the central bank is likely to hold policy rate in its next policy review meeting.

However, a few also believe a likely interest rate cut in early next year. The central bank is scheduled to announce its monetary policy next month.

“We don’t see a change in policy direction as yet, and expect a status quo in interest rates region in upcoming monetary policy meeting,” said an analyst at Alfalah Securities.

“Moreover, we believe policy makers would take a wait and see approach till there is more clarity on FATF, as an adverse decision can have implications on accessing foreign funding.”

The three-, five- and 10-year PIBs carry annual coupons of 9, 9.5 and 10 percent respectively.

The government launched its long-term PIBs in December 2000 to tap institutional investment and set a benchmark for corporate bond yields.

Topstory minus plus

Opinion minus plus

Newspost minus plus

Editorial minus plus

National minus plus

World minus plus

Sports minus plus

Business minus plus

Karachi minus plus

Lahore minus plus

Islamabad minus plus

Peshawar minus plus