PIBs auction fetches over Rs 216 billion

The federal government on Wednesday borrowed over Rs 216 billion through the auction of long-term government bonds against the auction target of Rs 100 billion. The last auction of Pakistan Investment Bonds (PIBs) 3-, 5-, 10- and 20-year maturity for this fiscal year was held on June 18, 2014. Overall, the SBP received bids worth Rs 211.06 billion with a total realised amount of Rs 217.409 billion.
Out of total received bids, the federal government accepted bids worth Rs 210.062 billion with a total realised value of Rs 216.385 billion against the target of Rs 100 billion. The cut-off yield of all long bonds is almost the same and a cut-off yield of 12.0970 percent was set for 3-year PIBs which helped borrow Rs 185.881 billion (realised amount).
An amount of Rs 16.086 billion (realised amount) was raised from the 5-year long-term investment bond at a cut-off yield of 12.5505. Similarly, a cut-off yield of 12.9980 percent was set for 10-year PIB with an accepting amount of Rs 6.076 billion (realised amount). For 20-year PIBs, some Rs 8.34 billion (realised amount) bids were accepted at 13.0007 percent cut-off yield. Cumulatively, the government borrowed some Rs 986 billion in last three auctions of Pakistan Investment Bonds (PIBs) held in last quarter of FY14 compared to the target of Rs 300 billion and maturities of Rs 31.8 billion.
Bankers said the higher borrowing through long-term investment bonds shows that government is re-profiling its domestic debt from short-term to longer-term to reduce rollover and refinancing risk. It also highlights the rising confidence of local participants such as banks, NBFIs and corporate over Pakistan economy. They said that for the last few auctions of the Market Treasury Bills, a thin participation has been witnessed due to higher cut-off yield of PIBs. They said in March this year for the first time in the history of the country, the federal government raised ever-highest Rs 530 billion through a single auction of long-term government bonds against the auction target of Rs 60 billion.