Long-term government securities: cut-off rates soar to 115bp – Business & Finance


KARACHI: Cut-off yields on long-term government securities rose sharply to 115 basis points at the auction held on Wednesday.

Although the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) kept the policy rate unchanged at its last meeting held on March 6, spreads on government securities continued to climb.

Previously, the spread on market treasury bills (MTB) had increased to 130 basis points at the March 9, 2022 auction. While Pakistan investment bond cut-off yields rose by 88 at 115 basis points during the Wednesday March 16 auction. , 2022.

The State Bank on Wednesday held an auction for the sale of 3-year, 5-year, 10-year, 15-year, 20-year and 30-year GDP and received bids amounting to Rs 588.897 billion with a realized value of 518,477 rupees. billion against a target of Rs 100 billion.

Offers received include Rs 159.7 billion for 3 years, Rs 259.589 billion for 5 years, Rs 162.658 billion for 10 years, Rs 3.46 billion for 15 years and Rs 3.49 billion for long term bonds of 20 years . However, no bids were received for the 30-year government securities.

The Federal Government accepted offers amounting to 192.846 billion rupees (realized value of 171.169 billion rupees) through the sale of 3-year, 5-year and 10-year bonds. While all offers of long-term 15- and 20-year government securities were rejected.

The 3-year GDP threshold yield increased by 115 basis points to 11.85% from 10.6998%. The amount borrowed was Rs 53.5 billion through 3-year long-term bonds. For the 5-year, offers amounting to Rs 80.43 billion were accepted at a yield limit of 11.7497%, up 100 basis points.

Similarly, the 10-year GDP cut-off yield jumped 88 basis points to 11.7418% from 10.8600% at the previous auction. Some Rs 59 billion was raised through the sale of 10-year GDP.

According to Topline Securities’ Muhammad Suhail, a huge Rs 589 billion stake was recorded in the GDP auction against a target of Rs 100 billion, likely due to the flattening/inverting of the yield curve against a backdrop of reversal in oil prices and expectations of lower inflation in the future.

Copyright Business Recorder, 2022


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