FINEX WEEK

 

 

By SHABBIR H. KAZMI
Updated June 05, 2004

 

As expected after the total outflow of Rs.15.00bn, overnight rates touched the levels of 5.50% and 6.50% and remained at the higher levels till the tail end of the week. Towards the end of the week, market eased and touched the rock bottom levels. Funds changed hands in the band of 0.35% to 0.50%. SBP on Friday conducted its OMO to give stability to the system and accepted meager amount of Rs.2.35bn in one and two

 

 

weeks at 1.50% and 1.25%. This outflow turned out to be insufficient and rates remained at the shallow levels. Due to the overnight, one and two week rates also hiked and initial covering in the respective tenors were observed around 4.00% and 3.25% respectively. Later as the rates in overnight eased, one and two week activity took place around 0.75% and 1.25%.

This week market experienced aggressive trading in long term where movement of around 100 basis points was seen in almost every tenor. Activity in one, three and six months was witnessed as high as 3.25%, 3.75% and 3.00%. Later on rates eased and activity in the respective tenors was noted around 2.90%, 2.75% and 2.90% respectively. Volatility was seen in bond market with trading in latest ten year PIB witnessed in the band of 7.68% to 7.80%. Initially due to the selling pressure activity was seen as high as 7.80%, but later on downward trend was noted and touched the level of 7.68%. No major activity was seen in 15 and 20 year PIB. However, few trades were struck just below the coupon rates i.e. 8.00% and 9.00%.

FUTURE OUTLOOK

Rates are expected to remain at the prevailing levels. PIB auction of 15 and 20 year is due in the coming week, and participation of less then target amount which is Rs.30bn is anticipated. Banks seem reluctant to build a long position in 15 and 20 years which can be seen in the secondary market where banks are willing to short sell these papers just below their coupon rates. Scheduled T-bill auction for three and twelve month is also due in the coming week, and comparatively low pre-auction target is expected.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

03.80

03.50

02.60%

2 Year

04.75

04.40

03.00%

3 Year

05.45

04.70

03.25%

4 Year

05.80

05.40

03.30%

5 Year

06.25

05.70

03.70%

10 Year

07.73

07.65

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

10 June

47,300 Mln

 


 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

02.50

06.00

00.25

1 Week

02.00

03.50

00.60

1 Month

03.75

03.00

01.75

3 Month

02.85

03.10

01.90

6 Month

03.00

03.00

02.00

1 Year

03.25

03.30

02.45

 


 

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

1 Month

03.90

03.25

02.00

2 Month

03.10

03.00

01.85

3 Month

02.90

02.75

01.90

4 Month

03.00

02.85

01.85

5 Month

03.05

02.85

01.85