March 26, 2003	Wednesday	Muharram 22, 1424

KARACHI, March 25: Yields fell sharply at a Pakistan Investment Bonds (PIBs) auction on Tuesday, fuelled by huge liquidity in the banking system due to rising remittances from overseas Pakistanis and the retirement of seasonal loans to the textile industry.

The State Bank of Pakistan said in a statement it sold Rs3.2 billion worth of three-, five- and 10-year bonds, slightly above the pre-auction target of Rs3 billion.

The central bank sold Rs1.15 billion of 10-year bonds at 140.58, or a yield of 4.03 per cent, down from 5.56 per cent in the last auction held on December 20, 2002. The 10-year bond has a coupon rate of 9 per cent.

It also sold Rs1.05 billion of five-year bonds at 122.02, or a yield of 3.19 per cent, down from 4.93 per cent at the last auction. The bond carries a coupon rate of 8 per cent.

Three-year bonds worth Rs1 billion were sold at 111.80, or at a yield of 2.87 per cent, down from 4.74 per cent. The coupon rate for this bond is 7 per cent.

Banks lodged bids totalling Rs13.20 billion at the auction. The auction was the second of a planned series of quarterly auctions of PIBs.

Last year, auctions were held on a monthly basis but the frequency was reduced due to the government’s lower financing needs.

Immediately after the result, the 10-year bond that matures on October 2012 — usually the most actively traded — was quoted at 3.95 per cent on the secondary market but no deal was struck, a dealer said. — Dow Jones Newswires