KARACHI, March 27: The State Bank mopped up Rs8 billion from a fairly liquid money market on Wednesday through sale of long- term bonds sticking strictly to the pre-auction target.

The central bank had set Rs8 billion target for the sale of three-year and five-year Pakistan Investment bonds.

Bankers said he auction of PIBs had attracted Rs17 billion bids of which the SBP accepted Rs8bn and scrapped the rest.

Bankers said the SBP drained out Rs2.66 billion and Rs5.35 billion respectively through sale of three-year and five-year bonds. They said the central bank sold the three-year bonds at a cut-off price of Rs101.55 per Rs100 and five-year bonds at Rs101.95. This means a slightly lower return on these bonds. The scripless bonds carry a fixed coupon rate of 9 per cent and 10pc but investors are allowed to price their bids at discount or premium.

The bonds have been trading at premium for quite some time as the coupon rates offer handsome return in an excessively liquid market.

Senior bankers said local and foreign banks purchased major chunk of PIBs adding that big corporates remained on the sidelines. The EOBI, National Insurance Corporation and Infaq Foundation were among those medium and small corporates that made some investment in PIBs.