. .



Updated on Jan 19, 2002

The interbank market went through a significant change as announcements were made by the MoF regarding withholding tax on government securities. The overnight and short term market continued to fall and sporadic activity was witnessed in the term market where rates tumbled sharply. Later in the week comments by General Musharraf regarding reducing bank lending rates also put pressure on term rates.

The overnight market remained restricted to the narrow band of 1.00% and 2.00% while one and two week rates fell to lows of 2.50% and 3.75%. It was evident in the early parts of the week that banks had no intention of holding onto the liquidity and system based trading was heavy. This slide in levels was apparently due to significant national scheme maturities that were reported in the market. The one month level at 6.50% in the early parts of the week was seriously hit by the prevailing conditions and fell to as low as 5.25% in the tail end of the week and 4.75% on Saturday. The longer tenors of three and six months coupled with the yields available on one year papers in the secondary market also came under pressure. Besides being dependent on one and two month rate slide, readjustment of withholding tax on government securities on a quarterly basis from July, caused six month activity at 7.00% and the 10/01/02 one year T-Bill buyers to be willing at 7.50% i.e. at 75 b.p.s lower than auction yield. It appears that traders have already taken into account that a 100 b.p.s cut in the discount rate is due anytime. However we feel that this change could actually be done after the T-Bill auction next week and might not make much impact on the rates that have witnessed lows. Furthermore the trading for the three and five year PIBs, to be auctioned on the 26th, was brisk with the 5 year paper trading at a premium of 200 b.p.s.

We feel that the term rates will be stable in the coming week as the auction draws nearer. Participation is expected to be at aggressive levels and concentration will be in the six and twelve month papers.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

07.50

08.25

12.50%

2 Year

09.00

09.00

12.75%

3 Year

09.80

10.50

13.00%

4 Year

10.00

10.75

13.25%

5 Year

10.50

11.00

13.75%

10 Year

11.50

12.00

14.50%

.

 
AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Jan 09 T-BILL Jan 09 Jan 10
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.9,396 Mln. Rs. 25,650 Mln. Rs.4,950 Mln



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

07 Jan 

6,000 Mln

T-Bill

24 Jan 

5,650 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

00.75

03.00

06.50

1 Week

01.75

05.50

08.75

1 Month

04.90

06.50

11.00

3 Month

06.20

07.15

12.00

6 Month

06.80

07.30

12.20

1 Year

07.25

07.80

12.50




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

1 Month

05.25

07.00

12.00

2 Month

06.00

07.00

11.75

3 Month

06.20

07.15

11.90

4 Month

06.50

07.30

11.90

5 Month

06.70

07.30

12.00