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FINEX WEEK

  1. The KASB review
  2. Finex week

Updated on Apr 03, 2000

The interbank market during the past week went through another volatile phase with overnight trading being conducted at both ends of the spectrum. Early in the week rates were within the double digit range but soon came off on Monday due to the OMO maturity of Rs. 4 billion. Furthermore withdrawals which had taken place on account of Eid also reportedly started to flow back in to the system. The fall continued with rates crashing further down to 1.50% on Thursday after the complete rejection of the latest OMO. One week levels also fell off sharply with lenders willing as low as 3.50% but bidders stayed away. Lenders were forced to place funds from Friday over the weekend at levels of 2.50% and hence providing an easy hedge for most bidders over the quarter end.

The term repo market which had remained firm for the last 2 weeks fell off drastically with the one month levels falling below 5.50%. The last time such a fall in this tenor had been around the 15th of March. One month rates were initially around 7.00% but crashed to 5.50% in the second half of the day on Thursday. The rejection of bids in the two way OMO was considered to be the prime factor instigating this fall. In fact the slide was so sharp that trades continued to be witnessed as low as 5.00% in the 1 month tenor. There were no major trades witnessed in any of the other tenors but offers for the two three and six month tenors were present at 6.15%, 6.50% and 6.90%, respectively. There were also short lived rumors of an imminent discount rate cut which led to a moderate fall in the 6 month quote. But with no validation coming forth from the SBP, long term rates steadied from a serious potential fall.

Next week the T-Bill maturity of Rs. 2.3 billion is due and a large participation in the auction is expected. It now remains to be seen as to how bearish the bid pattern will be in the next auction. We feel that without any clear signal from the SBP, bidding is advised to be restricted to within 20 to 25 b.p.s lower than the previous cut-offs. Although there are very decent chances of bidding taking place at unnecessarily aggressive levels, which could prove to be dangerously low in the medium to long term.

 

YIELD PROFILE

FEDERAL INVESTMENT BONDS

1 Year

08.00

08.75

11.80%

2 Year

08.75

09.25

12.25%

3 Year

09.25

09.75

13.50%

4 Year

09.75

10.00

13.75%

5 Year

10.00

10.50

14.50%

10 Year

10.50

11.25

15.50%

 


 

AUCTIONS
Bid Date Instrument Result Settlement
Mar 22 T-BILL Mar 22 Mar 24
Target Amount Bid Amount Accepted Amount
Rs.4.136 Bln

Rs. 12.700 Bln

Rs.900 Mln

 


 

MATURITIES

T-Bill

09 Mar

12,600 Mln

T-Bill

24 Mar

4,100 Mln

T-Bill

25 M^r

125 Mln

 


 

REPO RATES

Overnight

01.50

10.90

15.45

1 Week

03.00

09.25

15.40

1 Month

05.10

07.90

11.50

3 blonth

06.40

07.45

11.00

6 Month

06.75

07.50

11.25

1 Year

07.75

08.25

N.A

 


 

TREASURY BILL RATES

1 Month

06.50

08.80

12.75

2 Month

06.80

07.80

12.00

3 Month

06.90

07.70

11.60

4 Month

07.00

07.65

11.50

5 Month 07.10 07.55 10.45