The government raised Rs507 billion from the auction of fixed-rate Pakistan Investment Bonds (PIBs) on Tuesday, surpassing its target of Rs450 billion. However, yields increased on short-term tenors, according to the auction result released by the State Bank of Pakistan (SBP).
The two-year PIB yield rose by 13 basis points (bps) to 11.3292%, while the three-year bond yield increased by 21bps to 11.3493%.Â
The yield on the five-year bond went up by 6bps to 11.4999%. Conversely, yields on the 10-year and 15-year PIBs saw slight declines, with the 10-year bond yield dropping by 4bps to 12%, and the 15-year bond yield falling by 4bps to 12.34%.
Analysts noted that investors are seeking higher returns, anticipating that the SBP may maintain restrictive monetary conditions for a longer period in response to rising inflation and price pressures, particularly following the recent floods.
Pakistan’s inflation rate accelerated sharply in September, with the consumer price index rising to 5.6%, signaling renewed price pressures after months of relative calm.Â
The SBP has reduced interest rates by 1,100 bps since June 2024, including a 100bps cut in May 2025. The central bank has kept rates steady in June, July, and September. The next interest rate decision is expected on October 27.
