The State Bank of Pakistan (SBP) has successfully raised Rs157.529 billion in a recent auction of Pakistan Investment Bonds (PIBs), though it fell short of its Rs190 billion target.
During the auction, the SBP had a substantial offering of Rs460 billion worth of bonds. The results showed a preference among investors for shorter-term bonds: Rs81.1 billion was raised for three-year bonds, Rs40.574 billion for five-year bonds, and a lesser amount of Rs1.521 billion for ten-year bonds, based on competitive bids.
Additionally, the central bank gained Rs34.333 billion through non-competitive bids, taking the total to Rs157.529 billion.
This auction was characterised by the absence of short selling, and notably, no bids were received for the longer 15, 20, and 30-year PIBs.
The yields, or the returns investors will receive, were set at 16.8% for the three-year bonds, 15.5% for the five-year bonds, and 14.5% for the ten-year bonds. These rates represent a decline of 50 bps compared to previous auctions.
Comparing to the last PIB auction held on December 20, 2023, there was a decrease in yields for these bonds: 40 basis points for three-year bonds, 30 basis points for five-year bonds, and 50 basis points for ten-year bonds.
This reduction in yields is interpreted by market analysts as a sign that investors expect a fall in interest rates in the near future.
In contrast, during the last PIB auction, the SBP had raised Rs396.57 billion, which was more than double its target of Rs190 billion. The yields then had also dropped, but by a smaller margin of up to 19 basis points.
