SBP raises Rs252.3bn through PIB auction, yields drop by up to 180 bps

November 08, 2023 (MLN): The State Bank of Pakistan (SBP) raised Rs252.3 billion against a target of Rs160bn through the sale of fixed-rate Pakistan Investment Bonds (PIBs).

The central bank picked up Rs114.7bn for 3 years, Rs34.225bn for 5 years, and Rs63.336bn for 10 years bonds through competitive bids.

In addition to the competitive bids, SBP picked up Rs33.791bn from non-competitive bids.

Apart from the total amount raised through competitive and non-competitive bids, short selling worth Rs6.25bn also occurred during the auction, bringing the total amount raised to Rs252.3bn.

No bids were received for the 15, 20, and 30-year PIB.

The cut-off yields stood at 17.39%, 15.95%, and 15.1% for the 3-year, 5-year, and 10-year periods, respectively.

In comparison to the last auction held on October 02, the yields for the 3-year, 5-year, and 10-year PIBs recorded a notable decrease of 180, 100, and 15 basis points (bps) respectively.

The decline in yields is attributed to market participants' expectations that interest rates have peaked and are expected to fall in the coming months.

To note, in the last PIB auction, SBP raised only Rs104.82bn against a target of Rs160bn, and the cut-off yield was 19.19%, 16.95%, and 15.25% for 3, 5, and 10 years PIB, respectively.

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