KARACHI: The government on Wednesday raised Rs96.88 billion through the auction of Pakistan Inves­tment Bonds (PIBs) at slightly reduced cut-off yields.

The cut-off yield for three-year bonds was reduced by just one basis point to 16.64 per cent, for five-year PIBs by 3bps to 15.45pc and for 10-year bonds by 5bps to 14.29pc.

The government borrowing through PIBs was well below the target of Rs190bn. Financial sector experts observed that the government was mostly borrowing for short-term treasury bills despite higher cost of borrowing. The return on T-bills was in the range of 20-21pc compared to 14-15pc of the PIBs.

Investors were also cautious about long-term investments since the interest rate is still 22pc. Analysts and researchers believe inflation will further slow in May, but the State Bank is not confident about the future trend of inflation, which is a key factor in the change in the interest rate.

Published in Dawn, May 23rd, 2024