KARACHI, Aug 2: The State Bank will auction Rs3 billion long-term Pakistan Investment Bonds on August 17, the SBP said here in a statement. The central bank would sell Rs1 billion each of three-year, five-year and 10-year PIBs.

The SBP said that the coupon rates on the bonds would remain unchanged at 6 per cent for three years; 7 per cent for five years and 8 per cent for 10 years. The size of the auction surprised bankers who were expecting a much larger sale of bonds this month.

They said the small sale target set for the bonds would help the government keep the yields from rising sharply. Bankers said that immediately after the announcement of the bonds auction banks had started trading the bonds on when-issued basis - a term referring to forward sale of bonds with the condition that these would be made available when issued.

They said 10-year bonds traded at 7.90-8.0 per cent and five year bonds traded at 6.25-6.30 per cent. The market did not show much interest in three year bonds.