FINEX WEEK

 

 

By SHABBIR H. KAZMI
Updated Nov 29, 2002

 

The interbank market was liquid throughout the past week. The much awaited auction, after the reduction in the discount rate, was conducted which did result in an outflow though it did not affect the liquidity status of the market to a large extent. Short term rates remained in between narrow bands, while medium and long term continued to fall in the secondary market.

The overnight market touched a low of 2.50% on the inflow of Rs. 13 billion early in the week and did rise after the auction settlement and touched 7.00%, but only temporarily with most of the funds changing hands at around 5.00%. Towards the end of the week activity was witnessed at around 4.00% as well. The one week tenor was the most activity dealt the past week. Volatility caused trades in between wide bands of 4.75% and 6.00% throughout the week. The benchmark six month T-Bill auction with a target of Rs. 20 billion was announced against the scheduled one year paper. This did not come as a surprise as being the first auction after the reduction in the discount rate, cut-off yields needed to be set by the authorities. Rs. 68.725 billion was bid for the paper with the State Bank accepting only Rs. 25.10 billion. The new cut-off of 4.84% was exactly 153 b.p.s lower than the last auction conducted on the 14th of November. Banks did bid as low as 4.51% for this new paper which also reflected that this paper would be yielding capital gains, which it did so soon afterwards. The T-Bill market slid sharply and it was on the last working day of the week that this paper was traded at yields close to 4.20%. The 10 year bond prices also continued to rise and this long term paper traded at record yields of 6.97% as well.

The interbank market is still excessively long and feel that outflows on account of Eid will only marginally affect the short term market. We feel that there is still room for yields on T-bills to ease off in the secondary market.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

04.70

05.10

08.75%

2 Year

05.30

05.70

09.50%

3 Year

05.70

06.00

10.75%

4 Year

05.70

06.00

11.00%

5 Year

05.90

06.35

11.25%

10 Year

06.95

07.35

12.25%

 


 

AUCTIONS

BID DATE

INSTRUMENT

RESULT

SETTLEMENT

Nov 27 T-BILL Nov 27 Nov 28

TARGET AMOUNT

BID AMOUNT

ACCEPTED AMOUNT

Rs.20,000 Mln.  

Rs.68,725 Mln.

Rs.25,100 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

04.50

03.25

09.90

1 Week

04.00

03.00

08.50

1 Month

03.75

03.35

08.00

3 Month

03.70

04.10

07.85

6 Month

04.05

04.50

08.10

1 Year

04.40

05.10

08.50

 


 

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

1 Month

04.25

03.85

08.40

2 Month

03.80

04.10

07.90

3 Month

03.90

04.20

07.85

4 Month

03.90

04.30

07.95

5 Month

04.00

04.40

08.00