A thin participation was witnessed in the auction for Pakistan Investment Bonds (PIBs) as overall bids worth Rs 75 billion were received against the target of Rs 100 billion. The State Bank of Pakistan Wednesday conducted the first auction for PIBs for 3-, 5-, 10-, and 20-year maturity with coupon rates at 7.00 percent, 7.75 percent, 8.75 percent, and 10.750 percent, respectively with settlement date of July 27, 2017.
The first auction of FY18 fetched overall bids amounting to Rs 73.156 billion with a realized value of Rs 75.648 billion for the sale of 3-year, 5-year and 10-year long-term investment bonds. However, no bid was received for 20-year investment bond as banks are not willing to park invest on lower interest rate. Bids worth Rs 34.89 billion were received for 3-year bonds, Rs 15.075 billion for 5-year and Rs 23.19 billion were received for 10-year. Overall, the federal government borrowed some Rs 52.406 billion bids with a total realized amount of Rs 54.475 billion through the auction for PIBs against the target of Rs 100 billion set by the government for this auction.
Bids worth Rs 20.896 billion were accepted for the 3-year bond while its cut-off yield was set at 6.4029 percent up from 6.3392 percent in the previous auction. Similarly, the cut-off yield of 5-year bond remained stable at 6.8960 percent with accepted bids of Rs 10.457 billion. Some Rs 23.148 billion bids were accepted for 10-year bonds at a cut-off yield of 7.9359 percent. Analysts said there was little interest in the PIB auction by banks due to lower interest rate, therefore, they only bid for Rs 77 billion against the target of Rs 100 billion.