Govt raises Rs421bn, cuts yields on PIBs

The gover­nment on Wednesday rai­sed Rs421 billion through the auction of Pakistan Investment Bonds (PIBs) against the total bids of Rs1.5 trillion. The auction of long-term bonds reflected the government’s strategy to avoid short-term debt servicing, which creates fiscal imbalances each year. The auction was also crucial because the government exceeded the Rs350bn target while it remained restricted in last week’s auction of short-term treasury bills. The government cut the cut-off yields by 19 to 61 basis points for different PIB tenors, indicating pressure on the SBP to cut its policy rate in the upcoming monetary policy. The bidding pattern showed that the investors were eager to park their liquidity even for the 15-year bonds, but the government did not raise any amount for this tenor. However, it received the highest Rs716bn bids for two-year PIBs, followed by Rs400.5bn, Rs378.4bn and Rs56.2bn for three-, five- and 10-year bonds, respectively.