State Bank amends PFLs

KARACHI: The State Bank of Pakistan (SBP) on Friday amended Floating Rate Pakistan Investment Bonds (PFLs), saying only primary dealers of the government securities would be eligible to participate in the competitive auctions and submit non-competitive bids on behalf of the qualified investors, a circular said.

The government had already made changes to the Pakistan Investment Bonds Rules, 2000 on Wednesday.

The central bank said PFLs may be offered as quarterly coupon paying bonds, semi-annual coupon paying bonds, and / or monthly coupon paying bonds, as decided by the finance division.

Currently, the government is planning to issue PFLs with quarterly and semi-annual coupon payment frequency.

“The coupon rate shall be equal to the weighted average yield of the 3-month Market Treasury Bills (MTBs) as determined in the latest 3-month MTB auction held prior to the floating rate PIB’s auction or resetting of coupon,” it said. The coupon will be paid quarterly, it added.

The floating rate PIBs will be issued through multiple price competitive bidding auction process conducted by the central bank. Primary dealers (banks) will be required to place competitive bids in terms of price (up to four decimal points). Minimum bid size will be Rs100,000 and in multiples thereof. Primary dealers will be free to place multiple bids, it added.