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FINEX WEEK

  1. The KASB review
  2. Finex week

Updated on Dec 20, 1999

The overnight trades in the money market were witnessed between wide bands. Early parts of the week saw trading in single digits but later rates touched 12.90% while later closing at around 11.50% at the end of the week. This hike in rates was witnessed on the day of the T-Bill auction settlement when a net outflow of Rs. 2.85 billion was witnessed.

Indications of a 2.00% reduction in the cost of the domestic borrowings failed to affect the term repo market the past week, as the Finance Minister in the recent press conference discussed no specific details to this effect. Year end positions were clearly a reason for the firmness in rates, which was more than adequately reflected in the one month tenor where amounts were dealt as high as 12.50% in call. However the general bearish sentiment towards long-term interest rates was evident from the bid pattern in the latest T-Bill auction on Wednesday. Bids for six month and one year bills started from 10.00% and 10.31%, respectively. SBP picked up Rs. 1.95 billion with the cut-offs for the six month and one year papers at 10. 13% and 10. 34%, respectively. Interest was evident in the three month tenor as well with rates against FIBs touching 10.75%. However, against T-Bill, bids and offers were available at 9.60% and 10.00%, respectively with rates remaining mismatched.

Talk of an imminent fall interest rates did prompt certain banks to bid aggressively for the one year instrument in the latest auction. But the recent economic initiatives announced have been less than specific on that front. However, it appears that with the year end around the corner, short-term rates will have little room to fall. The exemption of NSS instruments from withholding tax has also made them more attractive and this is expected to put further strain on the overall liquidity status of the market as the year comes to a close coupled with the various banks' lottery schemes being abolished.

 

YIELD PROFILE

FEDERAL INVESTMENT BONDS

  THIS WEEK 1 WK AGO 1 YR AGO
1 Year 11.00 11.25 13.10%
2 Year 12.25 12.25 13.10%
3 Year 12.75 13.00 14.00%
4 Year 13.00 13.25 14.25%
5 Year 13.50 13.75 14.75%
10 Year 14.00 14.25 16.00%

 

AUCTIONS
Bid Date Instrument Result Settlement
Dec 15 T-BILL Dec 15 Dec 16
Target Amount Bid
Amount
Accepted Amount
Rs. 01.9 Bln.

Rs. 08.400 Bln

Rs.01.950 Bln

 

MATURITIES
Instrument Data Amount
T-Bill 02 Dec 750 Mln
T-Bill 05 Dec 200 Mln
T-Bill 16 Dec 1,000 Mln
T-Bill 23 Dec 950 Mln

 

REPO RATES

 

This Week

1 Wk Ago

1 Yr. Ago

Overnight 12.25 04.50 12.50
1 Week 11.00 10.00 10.00
1 Month 11.35 10.25 09.50
3 Month 09.65 09.00 11.35
6 Month 09.70 09.50 12.10
1 Year 11.00 11.25 N. A.

 

TREASURY BILL RATES
Maturing This Week 1 Wk Ago 1 Yr Ago
1 Month 12.25 10.25 14.00
2 Month 10.90 10.00 10.75
3 Month 10.35 09.20 11.25
4 Month 10.15 09.30 11.65
5 Month 10.00 09.50 11.85