6-Month KIBOR Drops by 18bps

The 6-Month Karachi Inter-Bank Offered Rate (KIBOR), a benchmark for lending to consumers and businesses, fell by 18 basis points (bps) on a day-on-day (DoD) basis after this week’s domestic bond auction helped raise Rs. 501 billion against a target of Rs. 360 billion.

According to the State Bank of Pakistan (SBP) data, the 6-month KIBOR clocked in at 21.07 percent, after the mid-week secondary market auction which saw the government raise 39 percent higher debt at rates roughly 100 bps below the central bank’s policy rate of 22 percent.

The other widely used 3-Month KIBOR was down 25 bps and was recorded at 21.09 percent. The 1-year KIBOR slid by 10 bps to 20.38 percent.

Official data indicates that Wednesday saw the cut-off yield for the 3-month T-Bills down by 60 bps to 21.0001 percent. The cut-off yield for the 6-month T-Bills went down by 29 bps to 21.0000 percent while the cut-off yield for the 12-month T-Bills declined by 31 bps to 20.1001 percent.

The government raised Rs. 122.40 billion for the three-month paper in the competitive auction. It also raised Rs. 70.42 billion and Rs. 182.98 billion for the 6-month and 12-month T-Bills respectively.

A further breakdown of the official numbers indicates that the government also raised Rs. 124.71 billion through non-competitive bids. This took the total amount raised during the auction to Rs. 501 billion.

  • IMF doesn’t permit Government to borrow directly from SBp, as a result SBP is lending money to banks at 22% and banks are lending money to Government…….alone UBL has borrowed over Rs 3 trillion from SBP and invested Rs 4.6 trillion in Government and other securities……..how will these banks settk3 these loans…..really scary…

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