FINEX WEEK

 

 

By SHABBIR H. KAZMI
Updated Nov 2, 2002

 

There was letting off in the liquidity crunch that the interbank money market has been facing since the 24th of October. Heavy discounting was reported at SBP, as banks could only cover nominal amounts from the market. Term rates also jumped up significantly as banks invested in one year T-Bills and simultaneously covered their positions in the term market. Hefty amounts were bid for this one year paper but cautiously the authorities only picked up the target amount.

The market remained dry with overnight rates at 8.90% and a maximum discounting of Rs. 19.70 billion being conducted at the SBP repo window. This intensity soon caused the one week market to touch the 9.00% level while two week activity was witnessed in the vicinity of 8.25%. Heavy covering in this tenor was primarily due to the onset of Ramazan, in which the market experiences traditional outflows. One month activity was reported at 7.00%, as few banks buying the one year paper preferred to cover themselves in this tenors. Brisk activity was conducted in the three month tenor at around 6.10% at the start of the week but value date being the auction settlement date. The auction the past week was for the sale of the three month and one year paper. The participation of Rs. 62.70 billion only against the one year paper did not come as a surprise. The State Bank stuck to picking up the target amount only and accepted Rs. 40 billion at a new yield of 6.91% which was 8 bps lower than the last one year's paper, sold in August. The latest PIB prices were in line with the trend witnessed in the global markets the past week. Trades were conducted as high as 112.30 which did ease off to 111.75, only to be seen rising back to 112.00 after statements made by the Finance Minister, regarding chances of a downward adjustment in the discount rate.

The crunch has done little for banks to stay away from the auction the past week. Heavy maturities are due next week that will yet again keep the State Bank from intervening and providing the much needed respite. Further, we feel that banks holding this paper will continue to enjoy capital gains, as witnessed the past week.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

06.40

06.75

09.00%

2 Year

07.15

06.90

09.90%

3 Year

07.30

07.00

10.50%

4 Year

07.75

07.50

11.00%

5 Year

08.25

08.00

11.50%

10 Year

09.25

09.10

12.50%

 


 

AUCTIONS

BID DATE

INSTRUMENT

RESULT

SETTLEMENT

Oct 30 T-BILL Oct 30 Oct 31

TARGET AMOUNT

BID AMOUNT

ACCEPTED AMOUNT

Rs.40,000 Mln. 

Rs.62,700 Mln. 

Rs.40,000 Mln.

 


 

MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

06 Nov

21,600 Mln

T-Bill

14 Nov

30,850 Mln

T-Bill

28 Nov

2,500 Mln.

 


 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

08.93

08.90

09.90

1 Week

08.85

08.00

08.50

1 Month

07.00

06.75

08.25

3 Month

06.45

06.40

08.00

6 Month

06.38

06.45

08.25

1 Year

06.60

06.75

08.60

 


 

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

1 Month

07.65

07.10

08.75

2 Month

06.75

06.80

08.10

3 Month

06.65

06.45

08.10

4 Month

06.55

06.45

08.20

5 Month

06.45

06.45

08.30