December 31, 2002	Tuesday	Shawwal 26, 1423

KARACHI, Dec 30: The State Bank on Monday sold Rs4.95 billion worth of long term Pakistan Investment Bonds on premium to raise Rs5.6 billion from the banking system.

SBP said it sold three-year bonds worth Rs2 billion on face value; five-year bonds worth Rs1.977 billion and 10-year bonds worth Rs968.5 million. The central bank had targeted Rs5 billion sale of bonds which it did stick to despite the fact that the auction of the bonds generated Rs13 billion bids on face value.

Senior bankers said corporates and banks purchased three year bonds for as high as Rs106.25 against every Rs100; five-year bonds at Rs113.45 and 10-year bonds for Rs126. This means that the buyers would get only 4.75 per cent return on three-year bonds against its fixed coupon rate of 7 per cent; 5.2 per cent on five- year bonds against 8 per cent and 5.75 per cent on 10-year bonds against 9 per cent.

“Such was the craze for 10-year bonds that after the auction was over some secondary market buyers bought them at an effective yield of even 5.35 per cent,” said a bank treasurer.