KARACHI: The State Bank of Pakistan on Monday announced the government has decided to raise Rs150 billion from issuing floating rate Pakistan Investment Bonds (PIBs) under Pakistan Investment Bonds rules, 2000.
The auction for these 10-year bonds is expected to be held on May 16th, June 13th and July 11th in which Rs50 billion each is being targeted to be raised.
According to the SBP notification, “only primary dealers of government securities will be eligible to participate in the competitive auctions and submit non-competitive bids on behalf of eligible investors.”
It added “the coupon rate on the floating rate PIBs will be equal to the benchmark rate plus/minus a margin decided in the auction.
“Benchmark rate would be the weighted average yield of the 6-month Market Treasury Bills (MTBs) as determined in the latest successful 6-month MTB auction held prior to the floating rate PIB’s auction and/or the start of the coupon period.”
SBP stated the coupon will be paid and reset semi-annually. “The floating rate PIBs will be issued at face value through uniform price competitive bidding auction process conducted by State Bank of Pakistan,” it said.
“Primary Dealers will be required to place bids as a margin over/under the benchmark rate. The margin has to be specified in terms of bps over/under the benchmark rate.
Minimum bid size will be PKR 100,000 and in multiples thereof. Primary Dealers will be free to place multiple bids,” said the SBP.
The central bank said cut-off margin over the benchmark rate (at and below which GOP decides to accept all bids) will apply uniformly to all accepted bids. This margin will remain fixed over the entire tenor of the floating rate PIB.
