KARACHI: The State Bank of Pakistan (SBP) raised Rs158 billion on Wednesday against the target of Rs100bn by selling fixed-rate Pakistan Investment Bonds (PIBs).

The auction received heavy participation as investors placed bids for Rs508bn while the cut-off yields remained mostly flat from the preceding auction held on Nov 29.

Speaking to Dawn, Ismail Iqbal Securities Head of Research Fahad Rauf said the investors’ participation was significantly higher than that in the last few auctions, which showed that the market expected the yields to stay at the same level in the immediate future.

Investors like banks and mutual funds shy away from buying bonds if they expect the yields to go up. In contrast, they purchase bonds enthusiastically when the yields are expected to decline, which enables investors to book capital gains.

The cut-off yield for three-year PIBs, which raised Rs32.3bn, increased 16 basis points from the last auction to 11.5 per cent. The cut-off yields for five- and 10-year bonds went down two and three basis points to 11.57pc and 11.76pc, respectively.

The SBP raised Rs107.28bn and Rs18.53bn through the five- and 10-year PIBs, respectively. The central bank didn’t receive any bids for 15- and 30-year papers. It rejected the bids for the 20-year bond.

Published in Dawn, December 23rd, 2021