FINEX WEEK

 

 

By SHABBIR H. KAZMI
Updated July 13, 2002

 

History was created yet again in the interbank market the past week. The acceptance of the largest amount ever in the T-Bill auction by the State Bank of Pakistan came as surprise when possibilities of a discount rate cut were looming around the corner. Heavy amounts of discounting was reported at the State Bank,  resulting in an injection that was unable to square of the market.

Short term rates were stuck at the bottom end of the spectrum with overnight activity at 1.00% and 2.00% levels. The one week level had moved up to 4.25% from the previous week's levels of 2.00% due to the T-Bill auction while one month trade were also reported at 5.00%. However, it was the T-Bill auction on which the entire market had set it eyes. Against the target amount of Rs. 20 billion the market bid an aggregate amount of Rs. 70.68 billion with SBP accepting a record amount of Rs. 69.28 billion. The secondary market prior to the auction had already reflected the possibility of such a participation. It was the State Bank's decision to maintain cut off levels at 5.8l %, 6.44% and 6.99% for the three, six and twelve month papers, respectively that caused a stir. Rates shot up across the board and one week trades were witnessed at 8.90% while call activity was reported higher as well. This resulted in an injection of Rs. 18.10 billion for one week at 7.25% that was still not enough to square off the market. Bond prices did slip slightly as the T-Bill yields were maintained and no clear sign of a discount rate cut soon were apparent to the market. The five year PIB to be issued on the 19th of this month had traded at yields close to 8.75% but moved back up to 9.00% to settle once again at 8.90%. Ten year PIBs also had changed hands at lows of yields close to 9.75% but rose back to the 10.00% level.

Chances of another OMO injection the coming week do seem a possibility as the market closed short on Saturday as well. However we feel that the interbank market is sure to feel the impact of inflows that are expected since the sharp reduction in the rates of return on National Savings Schemes. The market sentiment may have slightly changed regarding a discount rate cut, as the auction result might have given mixed signals, but we still feel that the authorities are sure to bring about this change.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

07.00

06.50

12.60%

2 Year

07.50

07.00

13.10%

3 Year

07.85

07.75

13.50%

4 Year

08.25

08.00

13.50%

5 Year

08.90

08.85

13.90%

10 Year

09.95

09.80

14.50%

 


AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
July 10 T-BILL July 10 July 11
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.20,000 Mln. Rs.70,685 Mln   Rs.69,285 Mln

 


MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

11 July

3,650 Mln.

T-Bill

25 July

11,705 Mln.

 


REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

08.95

02.00

00.75

1 Week

08.75

03.00

03.00

1 Month

07.35

04.80

08.50

3 Month

06.30

05.20

10.65

6 Month

06.25

05.70

11.45

l Year

06.75

06.25

12.20

 


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

1 Month

07.60

06.20

09.50

2 Month

06.70

05.10

09.75

3 Month

06.20

05.30

10.90

4 Month

06.15

05.50

11.10

5 Month

06.25

05.70

11.40