. .



Updated on Jan 26, 2002

The market remained under continuous change as the State Bank announced the much awaited cut in the repo discount rate. The market reacted further with rates crashing sharply in the term market compelling banks to purchase Treasury Bills at new lows in the auction. On the weekend colossal participation was also witnessed for the three and five year Pakistan Investment Bond auctions where the three and five year PlBs were sold at premiums of 306 and 311 basis points, respectively.

The overnight market was unmoved throughout the entire week with trading between the narrow band of 0.75% and 1.25% while one and two week activity was restricted to 3.50% and 4.50% levels. The past week was also significant as the one and two week tenors were introduced in the KIBOR. The first week saw a mixed reaction in the newly quoted tenors with rates between wide bands and brisk trading being reported on the dealing system. However later in the week the reduction in the discount rate by 100 basis caused a furor of activity. This change announced on the 23rd afternoon saw rates crashing across the board. The magnitude of the lending was so immense that bids close to 6.75% were squared off right after the news. Three and six month trades were also conducted at levels of 5.90% and 6.40% prior to the T-Bill auction. The discount rate cut caused the six month and one year papers to be the most attractive in the auction with a total bid of Rs. 54.825 billion. The State Bank announced cut-off for all the three papers at 6.17%, 6.59%, and 6.89% and picked up only Rs. 12.25 billion. The auction result did bring some stability to the market which has been falling in anticipation of the expected cut since the start of the new year. The PIB auction attracted a mammoth Rs.35. billion with buyers willing as high as 103.50 yielding 8.98% for the three year paper and 103.87 yielding 10.00% for the five year paper. The buyers looking for investment avenues were willing to pick up the three and five year papers with coupons of 10.50% and 11.00% at such high premiums, only suggesting that an adjustment in the coupon could be in the pipeline. The authorities continued to stick close to the target amount of Rs. 8.0 billion and accepted an aggregate amount of Rs. 7.68 billion.

We feel that the term rates in the interbank market may stay around the current levels and no further downward adjustment in the discount rate may be witnessed in this financial quarter. However, coupon rates on long term bonds being reduced once again could be a possibility.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

07.00

07.50

12.10%

2 Year

07.75

09.00

12.50%

3 Year

09.00

09.80

12.90%

4 Year

09.50

10.00

12.90%

5 Year

10.00

10.50

13.00%

10 Year

11.25

11.50

13.25%

.

 
AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Jan 23 T-BILL Jan 23 Jan 24
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.8,536 Mln  Rs.54,825 Mln  Rs.12,250 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

02.75

00.75

02.50

1 Week

03.50

01.75

05.50

1 Month

05.20

04.90

09.00

3 Month

05.70

06.20

11.25

6 Month

06.10

06.80

11.75

1 Year

06.60

07.25

12.10




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

1 Month

05.50

05.25

10.00

2 Month

05.40

06.00

10.75

3 Month

05.70

06.20

11.50

4 Month

05.80

06.50

11.50

5 Month

06.00

06.70

11.60