Govt Raises Rs. 376 Billion Through Pakistan Investment Bonds

The government on Thursday raised Rs. 376 billion through the auction of fixed-rate Pakistan Investment Bonds (PIBs) against an auction target of Rs. 100 billion. According to data from the central bank, the cut-off yields for all maturities went up by 120-145 basis points (bps) in the auction of the paper. The cut-off yield for three-year PIBs soared by 145 bps to 13.3 percent. It went up by 120 bps to 13.0 percent for the five-year paper and drove upwards by 141 bps to 13.2 percent for the 10-year paper. Interestingly, the SBP attracted total bids of Rs. 716.5 billion against an auction target of Rs. 100 billion. It registered sales of Rs. 26.9 billion with the three-year PIB, Rs. 62.8 billion through the five-year paper, and Rs. 286.2 billion via the 10-year paper, which made total proceeds of Rs. 375.8 billion. Moreover, it received bids for 3-year PIBs totaling Rs. 122.1 billion, 5-year PIBs worth Rs. 241.9 billion, and 10-year PIBs worth Rs. 352.6 billion. Conversely, the central bank did not attract any proffers or bids for the 15-year, 20-year, and 30-year papers with a combined auction target of Rs. 25 billion. The central bank recently increased the policy rate by 250 basis points to 12.25 percent and signaled that borrowing rates would remain high for the time being while referencing risks to external stability amid volatile movements in oil prices, high inflation forecast, and the global impact of Russia’s war on Ukraine as the main reasons.