Treasury bills attract $7m foreign investment in fresh auction

Published February 4, 2021
The country received fresh foreign investment of $6.921 million under the treasury bills (T-bills) on Feb 2, the State Bank reported on Wednesday. — AFP/File
The country received fresh foreign investment of $6.921 million under the treasury bills (T-bills) on Feb 2, the State Bank reported on Wednesday. — AFP/File

KARACHI: The country received fresh foreign investment of $6.921 million under the treasury bills (T-bills) on Feb 2, the State Bank reported on Wednesday.

The latest inflow of almost $7m in domestic bonds since the beginning of February could be an encouraging sign for foreign investors who have already parked over $104m in long-term bonds.

Experts say the latest inflow bills would further enhance foreign investment in short-term T-bills.

The country had to face sudden erosion of foreign investment in the domestic bonds after the the Covid-19 pandemic hit the country in March 2020.

Before the emergence of Covid-19, the country had attracted $3.4 billion foreign investment in the government bonds. Most of the inflows were noticed in the short-term T-bills which helped foreign investors get their money out quickly when the pandemic started.

After withdrawing heavily during the pandemic, the foreign investors again returned to domestic bonds and invested $104.8m during November 2020 to January 2021.

The change was noted in November FY21 when foreign investors started buying PIBs and the momentum picked up pace over the next two months. Foreigners bought PIBs worth $27m in January alone.

However, the investment pattern changed this time as investors chose to keep their money for a longer period.

A research head of an investment company said the 10-year PIBs were the biggest attraction as these offered about 10pc yield which was the best in the known developed and competitive developing economies.

Experts on foreign investments and bonds believe that the recent development on external front was the real attraction for the investors.

They said the current account surplus for the first half of the FY21 provides a positive sign for the investors.

This surplus also helped to bring stability in the exchange rate which is another sign on improvement while the foreign exchange reserves of the country surpassed $20bn providing a sense of security to the investors.

Rs60bn raised through PIBs

The government raised Rs60bn through auctions of PIBs out of total bids of Rs257bn on Wednesday.

The government raised Rs10.45bn for three-year PIBs at the rate of 8.99pc while Rs21bn for five-year bonds at 8.58pc. Highest returns were for 10-year PIBs. The government raised Rs27bn for this tenure at 10.58pc. The weighted average yield for 10-years PIBs was 9.99pc.

Published in Dawn, February 4th, 2021

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