FINEX WEEK

 

 

By SHABBIR H. KAZMI
Updated Jan 11, 2003

 

The money market continued to feel the liquidity crunch the past week as well. Outflows witnessed at the year end were the main cause for the shortfall in the market, that did somewhat ease off towards the weekend. The SBP discount window had to be tapped throughout the week, with a maximum of Rs. 15.40 billion of discounting being witnessed.

 

 

However, this shortfall could not deter banks from bidding aggressively in the T-Bills auction that saw new cut-off yields yet again. Overnight activity was witnessed continuously at 7.40% but was conducted as low as 5.00% on the weekend. Shortfall persisted throughout the week and the auction inflow and outflow could not bring about any major change. However it was only on Saturday that banks managed to cover themselves at slightly lower levels. One and two week rates also fell of from highs of 7.00% and 6.00% to close at 4.50% and 5.50%, in the respective tenors. The T-Bill auction with a target of Rs.32 billion and a simultaneous maturity of Rs. 39 billion resulted in an aggregate participation of Rs. 60.2 billion. There was no surprise in the manner that banks participated keeping in mind that heavy trading for six month and one year papers had been witnessed at levels below 4.00% on the onset of the year. The six month cut-off yield was announced at a new record low of 3.95% but immediately following the result the paper traded at 3.85% in the secondary market with further activity being reported at close to 3.70% on the weekend. The three month repo market did jump sharply and cross over into the 4.00% band after trading at 3.75% in the previous week. However this was short lived and offers were soon available at 3.85%. We feel that the market is out of the liquidity crunch witnessed since the start of the new year and short term rates are sure to ease off. T-Bill rates seem to be on the slide and we feel that chances of new lows in the secondary market would not be a distant possibility.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

04.00

04.00

08.50%

2 Year

04.20

04.20

09.25%

3 Year

04.40

04.40

10.50%

4 Year

04.40

04.40

10.50%

5 Year

04.65

04.60

11.00%

10 Year

05.20

05.10

12.00%

 

 

 


 

AUCTIONS

BID DATE

INSTRUMENT

RESULT

SETTLEMENT

Jan 08 T-Bill 06 mth. Jan 08 Jan 09

TARGET AMOUNT

BID AMOUNT

ACCEPTED AMOUNT

Rs.32,000 Mln. 

Rs.60,204 Mln. 

Rs.33,800 Mln.

 

 

 


 

MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

09 Jan 

39,330 Mln

T-Bill

23 Jan

15,800 Mln.

 


 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

06.25

07.40

09.90

1 Week

05.75

07.00

07.00

1 Month

04.35

04.20

07.00

3 Month

03.75

03.90

07.35

6 Month

03.75

03.90

07.45

1 Year

03.95

04.10

07.90

 


 

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

1 Month

04.85

04.70

07.40

2 Month

04.00

04.10

07.30

3 Month

03.65

03.85

07.35

4 Month

03.60

03.80

07.45

5 Month

03.60

03.80

07.45