. .



Updated on Feb 16, 2002

The State Bank of Pakistan provided relief to the Interbank Market by injecting liquidity early in the week. Rates eased off in the short term market while term rates remained firm, as banks were quite inclined on maintaining levels close to the Treasury Bill yields provided in the auction, but this sentiment also changed later. With the announcement of the Pakistan Investment Bond auction, trading for the paper started with demand for this when issued paper rising sharply.

The overnight rate at 8.90% and the market short by Rs. 17.30 billion the State Bank provided relief by injecting liquidity in the two week and one month tenor at a uniform rate of 6.25%. This caused a sudden ease in rates as banks managed to obtain funds to cross them over the Eid period, a time of traditional outflows. Overnight activity was conducted at 5.00% and rates crashed to lows of 1.00% on the weekend. One, two week and one month offers fell off with heavy trading being reported on the dealing system. It was on the last day of the week that activity was conducted at 3.00%, 4.00% and 5.25% in these tenors, respectively. With no major change expected three and six month rates also eased off with trades being struck as low as 5.50% and 6.00%. Sentiment of the dealers also caused activity in the long dates papers as yields eased. January 2003 maturity papers were traded at yields close to 6.60% while later in the week activity was also reported lower. Furthermore trading in the ten year PIB to be issued on the 28th of February also reflected the response to the 100 basis points downward adjustment in the coupon rate on this bond. Trading started at a price of 101.00 but within thirty minutes of the announcement of the auction, having a target amount of Rs. 8.0 billion price touched 104.00, a yield to maturity of 10.35%. It should be noted that the State Bank reduced the coupon rate on the three, five and ten year papers to bring them to 9%, 10% and 11 % on these long term bonds, the third such adjustment since the introduction of PIBs in December 2000.

The past week has reflected that the authorities are there to provide liquidity to the interbank market when needed, even after mopping it up rather aggressively. We feel that the downward adjustment in the coupon rates on the long term bonds will only put further pressure on rates that had risen after the T-Bill auction and participation in the coming auction will yet again be a levels much lower than the cut-off witnessed recently.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

07.50

07.60

11.75%

2 Year

08.70

08.70

12.60%

3 Year

09.60

09.75

13.01%

4 Year

09.60

10.00

13.00%

5 Year

10.75

11.00

13.25%

10 Year

11.25

12.25

13.50%

.

 
AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Feb 06 T-BILL Feb 06 Feb 07
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.3,997.796 Mln. Rs.25,412.3 Mln. Rs.25,412.3 Mln



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

07 Feb 

2,198 Mln

T-Bill

21 Feb 

10,250 Mln



REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

01.50

08.90

07.00

1 Week

02.75

08.40

05.00

1 Month

05.00

07.00

08.75

3 Month

05.50

06.05

10.80

6 Month

05.80

06.40

11.10

1 Year

05.80

06.75

11.75




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

1 Month

05.10

07.50

09.75

2 Month

05.50

06.50

10.90

3 Month

05.65

06.10

11.00

4 Month

05.85

06.20

11.10

5 Month

05.90

06.30

11.20