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Pakistan Money Market Review

Updated on Feb 19, 2001

Short term rates in the money market took a sharp twist with in the post auction and OMO sessions. Having remained at maximum levels of 4.00%, the overnight rate touched the 12.90% level shortness being felt. On account of the OMO and the Pakistan Investment Bond auction the market experienced outflows of Rs. 15.50 and Rs. 15.504 billion. Against these outflows Rs. 9.35 billion was witnessed flowing in coupled with the fact that the market had already been running long, due to which rates had been at the lower end of the spectrum. Discounting was witnessed on the last three days of the week with the figures being Rs. 2.2 bln Rs. 3.2 bln and Rs. 2.2 bln for the respective days. It seems that the coming week would be tight and only ease upon the OMO maturity of Rs. 14.40 billion falling on 22nd if banks prefer to stay away from the T-Bill auction next week.

The one month repo level turned around sharply with offers only being available in double digits. It was prior to the OMO that the three month repo market had been active. Rates had actually fallen off sharply with trades as low as 10.50%. This sudden fall in the three month repo level was actually triggered by sudden lending in the two and three month call tenors. Trades were witnessed starting from 13.10% to as low as 12.25%. Six month repo activity was also witnessed at around 11.25% with nominal amount changing hands. The PIB auction which had been announced in late January was conducted on the 13th. As forecasted by the dealers on our dealing desk and also mentioned in the last weekly, amount exceeding the pre-auction target managed to be accepted that too at a premium. The cut-offs for the three, five and ten years papers was at a price of 100.10 with yield to maturity working out to be 12.45%, 12.97% and 13.98%, for the respective papers. In fact the heavy demand for this paper could be gauged from the fact that some buyers had also placed bids for the 10 year paper at prices as high as 100.35. The OMO a two way in nature with SBP only interested in picking up the money for the one and eight week tenors. SBP mopped up Rs. 14.25 billion at 9.25% for one week while Rs. 1.25 billion at a cut-off of 10.25%.

The accepted amount amounting to nearly twice the target amount has definitely reflected the success of these long term bonds and the type of yields structures that the buyers of this bond are interested in. However, it should be noted that most of the buying for these instruments has been corporate driven and banks still would be hesitant to hold these long term bonds specially at a time when the international lending agency is speaking for a higher interest rate scenario for the country. As far as the Treasury Bill auction, scheduled for next week, is concerned we still feel that the State Bank will continue to sell it bills of maximum maturity of one year at the previous cut-off levels with interest mostly for the three and six month papers.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

11.15

11.80

08.35%

2 Year

12.80

12.60

08.85%

3 Year

13.00

13.00

09.50%

4 Year

13.00

13.00

09.75%

5 Year

13.10

13.25

10.25%

10 Year

13.25

13.50

12.75%
.


AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Jan 24  T-BILL Jan 24  Jan 25 
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.11.407 Bln 

Rs.9.201 Bln.

Rs.5.353 Bln



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

08 Feb

150 Mln

T-Bill

22 Feb

1250 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

12.90

04.50

09.00

1 Week

12.00

05.50

06.50

1 Month

10.00

08.75

06.50

3 Month

11.15

10.75

07.00

6 Month

11.25

11.50

07.30

1 Year

11.75

11.80

N. A.




TREASURY BILL RATES
MATURING THIS WEEK 1 WEEK AGO 1 YEAR AGO

1 Month

11.00

09.75

06.50

2 Month

10.90

11.00

06.75

3 Month

11.15

11.10

07.00

4 Month

11.20

11.20

07.15

5 Month

11.20

11.40

07.20