Bond Yields Stable As Year-to-Date Outlook Remains Jittery

The yields on all the Pakistani secondary market bonds have remained largely unstable for the calendar year 2022 as hefty import bills, the impact of recent floods, and the economy’s future growth outlook have got markets in a cold sweat.

According to data released by Topline Securities on Monday, secondary market bond yields went up by 1-4 basis points (bps) across eight different instruments. On a calendar year-to-date (CYTD) basis, the yields have spiked by a massive 167-576 bps.

Since the start of the new financial year 2022-23, most of the bond yields have surged by up to 97 bps, while some slid by up to 16 bps.

The yield on the three-month bond increased by 4 bps from 15.91 percent to 15.95 percent on Friday, while the yield on the six-month paper went up by 2 bps to 15.90 percent from 15.88 percent.

Bond yield for the one-year government paper was stable and gained 1 bps from 15.95 percent to 15.96 percent. Yields went marginally up by 1 bps to 13.82 percent for the three-year paper, yields were stable at 13.21 percent for the five-year paper, gained 1 bps to 12.76 percent for the 10-year paper, and stayed at 13.25 percent for the 15-year paper.

The yield on the 20-year bond went down by 3 bps to 13.48 percent.

On a CYTD basis, the yield for the three-month paper has soared by 576 bps to 14.98 percent, 531 bps to 15.15 percent for the six-month paper, 519 bps to 15.30 percent for the one-year paper, 304 bps to 13.45 percent for the three-year paper, 235 bps to 12.93 percent for the five-year paper, 167 bps to 12.92 percent for the 10-year paper, 173 bps to 13.25 percent for the 15-year paper, and 169 bps to 13.50 percent for the 20-year paper.

Bond yields and forecasts on similar instruments remain uncertain as Pakistan plans a massive overhaul to rehabilitate and stabilize the economy due to damages faced by the recent floods.

For now, Pakistan needs to bolster support from international partners and friendly countries. Lenders like the  International Monetary Fund (IMF) can also be approached for a financing instrument to shore up the rebuilding process.