Govt raises Rs648 billion through fixed-rate PIBs as yields fall

The government raised Rs648.5 billion through the auction of fixed-rate Pakistan Investment Bonds (PIBs) on Wednesday, exceeding its Rs350 billion target by Rs298.5 billion, as yields declined across the two-, three-, five- and 10-year maturities.

The amount raised was about 85% higher than the auction target, according to data from the State Bank of Pakistan compiled by Arif Habib Limited Research.

The government accepted Rs583.5 billion through competitive bids and another Rs65 billion through non-competitive bids.

The largest amount was raised through five-year Pakistan Investment Bonds, with total accepted bids of Rs349.7 billion. This comprised Rs313 billion in competitive bids and Rs36.7 billion in non-competitive bids.

Three-year bonds attracted Rs170.4 billion, including Rs153 billion through competitive bids and Rs17.4 billion through non-competitive bids.

The government raised Rs124 billion through 10-year bonds, comprising Rs115 billion from competitive bids and Rs9 billion from non-competitive bids.

The two-year maturity accounted for Rs4.5 billion, including Rs2.5 billion in competitive bids and Rs2 billion in non-competitive bids.

Bids for 15-year Pakistan Investment Bonds were rejected.

Cut-off yields declined across all accepted maturities compared with the previous auction held on May 18.

The cut-off yield on two-year bonds fell by 111 basis points to 12.14% from 13.25%.

The three-year cut-off yield recorded the largest decline, falling by 116 basis points to 12.09% from 13.25%.

For five-year bonds, the cut-off yield declined by 76 basis points to 12.19% from 12.949%.

The cut-off yield on 10-year bonds fell by 34 basis points to 12.61% from 12.949%.

Weighted average yields also declined across the accepted maturities.

The weighted average yield on two-year bonds fell by 101 basis points to 12.14% from 13.1462%, while the yield on three-year bonds dropped by 119 basis points to 12.0593% from 13.2466%.

The five-year weighted average yield declined by 82 basis points to 12.0923% from 12.914%.

The weighted average yield on 10-year bonds fell by 26 basis points to 12.5713% from 12.832%.

The yield curve accompanying the auction results showed the three-month rate at 12.04%, the six-month rate at 12.40% and the one-year rate at 12.76%.

Among longer maturities, yields stood at 12.14% for two years, 12.09% for three years, 12.19% for five years and 12.61% for 10 years.

The one-year rate of 12.76% was the highest point on the displayed yield curve, which declined across the two- and three-year maturities before rising towards the 10-year tenor.