FINEX WEEK

 

 

By SHABBIR H. KAZMI
Updated Oct 19, 2002

 

The interbank money market remained under pressure throughout the week. Maturities early in the week were the primary reason for the ease in the liquidity crunch. However term rates remained firm as there was no major downward adjustment in the six month Treasury Bill yields in the auction. Prices of the ten year Pakistan Investment Bond to be sold on the 23rd of the month continued to oscillate with heavy activity taking place between primary dealers and other institutions.

Overnight rates finally came off and fell below 5.00% after remaining at sky high levels for the first two weeks of the month. OMM maturities to the tune of Rs. 16.90 billion wiped out the shortfall in the market resulting in one and two week rates also falling off sharply. However this did somewhat cause the one month level to ease off to 6.00%, only to be seen rising back as heavy borrowing was persistent. Three months trades were also reported in the narrow band of 6.15% and 6.30%, while interest in six months was lacking. The six month T-bill auction reflected that the six month paper is still the favourite of the market players. For the first time auction was restricted to the six month paper only, which managed to attract a total bid of Rs. 28.55 billion against the target of Rs. 15 billion. The acceptance of Rs. 19.75 billion was very much in line with the expectations of the market. SBP stuck close to the target amount and also managed to bring down the cut-off yield by about 2 basis points to 6.37%. On the other hand the long term PIB buyers continued to reflect the sentiment for investment for ten years. Prices for this paper generally reflected an upward trend throughout the week and trades were reported as high as 111.60 from as low as 110.25.

It does seem that the liquidity is concentrated in a few hands and rates have not managed to slide down with persistent volatility being witnessed in the overnight market. The PIB auction is scheduled for this week and we feel that the acceptance of the target amount of Rs 12 billion would not come as a surprise at all.

YIELD PROFILE

FEDERAL INVESTMENT BONDS
.

THIS WEEK

1 WEEK AGO

1 YEAR AGO
1 Year 06.60 06.60 11.00%
2 Year 07.10 06.90 11.50%
3 Year 07.20 07.10 12.00%
4 Year 07.50 07.50 12.00%
5 Year 08.15 08.10 12.75%
10 Year 09.25 09.35 13.50%

 

 
AUCTIONS

BID DATE

INSTRUMENT

RESULT

SETTLEMENT
Oct 16 T-BILL Oct 16 Oct 17

TARGET AMOUNT

BID AMOUNT

ACCEPTED AMOUNT
Rs 15,000 Mln

Rs 28,550 Mln

Rs 19,750 Mln

 

 
MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

03 Oct

4,100 Mln.

T-Bill

17 Oct

6,950 Mln.

T-Bill

31 Oct

29,900 Mln.

 

 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO
Overnight 06.75 08.90 11.90
1 Week 07.00 07.75 10.50
1 Month 06.45 06.60 10.10
3 Month 06.23 06.20 10.00
6 Month 06.30 06.30 10.25
1 Year 06.60 06.50 10.60

 

 
TREASURY BILL RATES
MATURING THIS WEEK 1 WEEK AGO 1 YEAR AGO
1 Month 06.90 07.00 10.75
2 Month 06.40 06.50 10.10
3 Month 06.25 06.30 10.00
4 Month 06.30 06.30 10.10
5 Month 06.35 06.20 10.25