May 10, 2023 (MLN): The government's recent auction of Pakistan Investment Bonds (PIBs) fell short of its target of raising Rs100 billion and raised only Rs62.9bn, as investors demanded higher returns.
According to data from the State Bank of Pakistan (SBP), the government received bids worth Rs119.96bn cumulatively against 3-year, 5-year and 10-year. Of which, only 3-year tenor bids worth Rs62.88bn were accepted at the cut-off yield of 19.38%, up by 100 bps since the last auction, while the 5-year and 10-year tenor bids were rejected.
It is pertinent to mention that no bid was received against 15-year, 20-year, and 30-year tenors, showing the lack of confidence of investors in the outlook of Pakistan’s economy.
The low turnout of investors in the recent PIBs auction highlighted the increasing concerns over the government's ability to meet its debt obligations.
The government may need to reconsider its borrowing strategies to attract more investors and reduce its debt burden.
