FINEX WEEK

 

 

By SHABBIR H. KAZMI
Updated May 29, 2004

 

The important events of the past week were the T-bill and the PIB auctions. SBP conducted six-month T-bill auction with a pre-auction target of Rs. 2 billion and surprised the market by accepting Rs. 1.60 billion at a high cut-off of 2.23% around 39 basis points higher than the previous cutoff. This pre-empted aggressive trading in the PlBs with the most active paper being the ten-year 'when-issued' where trades were done around 6.82% to 6.90%. As the week progressed, yields on this bond touched a high of 7.05% before

 

 

the auction. SBP conducted the much-awaited PIB auction of 3, 5 and 10-year tenors with a pre-auction target of Rs. 2, 3 and 10 billion, respectively and accepted a total of Rs. 14.85 billion increasing the cut-off yields by around 88, 45 and 58 basis points on the designated papers. After the announcement of these results, trading in the ten-year issue was seen initially as high as 7.55% before settling in a band of 7.35% and 7.30%. Trades in the 15 and 20-year 'whenissued' PIB initially took place in a band of 8.60% to 8.70% and 9.60% and 9.70%, respectively but later trades were seen just below the coupon rates of the respective papers which are 8.0% and 9.00%.

FUTURE OUTLOOK

Higher cut-off for the T-Bill and PlBs during the past week has signaled an overall increase in interest rates and yields on longer PlBs are now moving closer to their coupon rates. Keeping in view an outflow of Rs. 15.00 billion for the settlement of the PIB, shorter term rates are also likely to move upwards. We feel that the next major upward move will be seen in T-Bill yields as the gap narrows between bills and shorter dated bonds.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

03.50

02.80

02.60%

2 Year

04.40

03.50

03.00%

3 Year

04.70

04.03

03.25%

4 Year

05.40

04.70

03.30%

5 Year

05.70

05.03

03.70%

10 Year

07.65

06.82

05.00%

 

 

 


 

AUCTIONS

BID DATE

INSTRUMENT

RESULT

SETTLEMENT

May 26 T-Bill 03 mth. May 26 May 27

TARGET AMOUNT

BID AMOUNT

ACCEPTED AMOUNT

Rs. 2,000 Mln 

Rs.3,850 Mln. 

Rs.1,600 Mln

 


 

MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

13 May

65,380 Mln.

 


 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

06.00

00.50

00.75

1 Week

03.50

00.60

01.50

1 Month

03.00

01.65

01.60

3 Month

03.10

02.25

01.80

6 Month

03.00

02.35

01.95

1 Year

03.30

02.50

02.45

 

 

 


 

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

1 Month

03.25

01.85

01.85

2 Month

03.00

02.20

01.80

3 Month

02.75

02.10

01.85

4 Month

02.85

02.15

01.90

5 Month

02.85

02.20

01.85