Govt Raises Rs. 193 Billion Through Pakistan Investment Bonds

The government on Wednesday raised Rs. 193 billion through the auction of fixed-rate Pakistan Investment Bonds (PIBs) against an auction target of Rs. 100 billion as a result of the State Bank of Pakistan’s (SBP) unchanged interest rate.

According to data from the central bank, the cut-off yields for all maturities went up by 88-115 basis points (bps) in the auction of the paper.

The cut-off yield for three-year PIBs soared by 115 bps to 11.85 percent. It went up by 100 bps to 11.75 percent for the five-year paper and drove upwards by 88 bps to 11.74 percent for the 10-year paper.

The SBP attracted total bids of Rs. 589 billion against an auction target of Rs. 100 billion. It registered sales of Rs. 54 billion with the three-year PIB, Rs. 80 billion through the five-year paper, and Rs. 59 billion via the 10-year paper.

Moreover, it received bids for 3-year PIBs totaling Rs. 160 billion, 5-year PIBs worth Rs. 260 billion, 10-year PIBs worth Rs. 163 billion, 15-year PIBs worth Rs. 3 billion, and 20-year PIBs at Rs. 3 billion.

Conversely, the central bank did not attract any proffers or bids for the 30-year paper which had an initial auction target of Rs. 3 billion.

It is noteworthy that the central bank recently kept the policy rate unchanged at 9.75 percent and signaled that borrowing rates would remain flat for the time being while referencing a flattening/inversion of yield curve amid reversal in oil prices, lower inflation forecast, and the global impact of Russia’s war on Ukraine as the main reasons.