FINEX WEEK

 

 

By SHABBIR H. KAZMI
Updated May 15, 2004

 

The inter-bank market was flooded with liquidity and lending pressure was seen throughout the week due to which major activity in overnight was confined in a narrow band of 0.15% to 0.50%. State Bank conducted three OMO's to give stability to the system and mopped a total amount of Rs. 4.80 billion in one and two-week at 1.25%. These interventions were however insufficient and short-term remained under pressure. The SBP conducted T-bill auction in three and twelve-month tenors with a preauction target of Rs. 65 billion. As expected, heavy participation of

 

 

Rs.76 billion was reported. Market anticipated an upward adjustment of around 13 and 14 basis points for both the papers. SBP accepted total amount of Rs.29.77 billion in three-months at the cut-off yield of 1.7451% and accepted Rs.28.10 billion in one-year at 2.2452%. This upward movement in T-bill yields had a significant impact on the term market and rates almost in every tenor hiked and two and three-month trades were seen as high as 2.15% and 2.00%, respectively. Six-month also saw upward movement and deals in this tenor were executed around 1.90% to 1.95%. Market is experiencing a reversal in the interest rates, which is already indicated in the T-bill auction. The bond market reacted accordingly and sudden hike in yields were observed and trades in latest ten-year bond was dealt as high as 6.62% which is around 20 basis points higher from the cut-off yield of this paper. Trades in when-issue ten-year PIB were. conducted as high as 6.65%. This clearly indicates that market is expecting further hike in the coming PIB auction.

Future Outlook

The prevailing liquidity in the system is expected to remain the same. Short-term rates are likely to remain under pressure with overnight rates expected to remain under 1.00% mark. However, due to the latest increase in T-bill cutoff, upward trend is indicated and long-term rates are likely to move upwards. The prevailing trend in bond market is expected to continue and ten-year latest PIB may touch the level of 6.66%.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

02.60

02.50

02.65%

2 Year

03.50

03.40

03.05%

3 Year

03.80

03.70

03.25%

4 Year

04.65

04.45

03.30%

5 Year

04.93

04.83

03.65%

10 Year

06.63

06.46

04.85%

 


 

 

AUCTIONS

BID DATE

INSTRUMENT

RESULT

SETTLEMENT

May 12 T-Bill 03 mth. May 12 May 13
May 12 T-Bill 12 mth. May 12 May 13

TARGET AMOUNT

BID AMOUNT

ACCEPTED AMOUNT

Rs.65,000 Mln. 

Rs.76,475 Mln.  

Rs.57,875 Mln

 


 

MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

13 May

65,380 Mln.

 


 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

00.25

00.25

00.75

1 Week

00.75

00.75

01.75

1 Month

01.45

01.35

01.90

3 Month

01.80

01.85

01.95

6 Month

01.95

01.90

02.05

1 Year

02.20

02.15

02.60

 


 

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

1 Month

01.50

01.45

02.30

2 Month

01.75

01.80

02.10

3 Month

01.80

01.80

01.95

4 Month

01.90

01.85

02.00

5 Month

01.95

01.90

02.10