The State Bank of Pakistan has raised approximately Rs506 billion through the latest auction of fixed-rate Pakistan Investment Bonds (PIBs), reflecting strong investor preference for longer-tenor instruments. The auction, held in mid-October, saw robust participation, particularly for the 10-year and 15-year maturities, while shorter tenors attracted more limited interest.
Unlike fresh issuances, this auction involved the reopening of previously issued PIBs. The structure included zero-coupon instruments for 2-year and 15-year maturities, while the 3-year, 5-year, and 10-year bonds carried fixed coupon rates of 10.5 percent, 11 percent, and 11.5 percent respectively.
The total bids offered reached Rs1.54 trillion, demonstrating substantial liquidity in the market and keen interest in government securities. Out of this, the central bank accepted bids worth Rs506.73 billion (face value), with the majority directed toward long-term bonds. This aligns with market sentiment that favors locking in yields at attractive levels ahead of potential monetary policy adjustments.
The lion’s share of accepted bids came from the 10-year bond, where the SBP accepted Rs333.4 billion in competitive bids and an additional Rs4 billion in non-competitive bids, totaling Rs337.4 billion. This accounted for around two-thirds of the total accepted amount. The 15-year zero-coupon PIB also drew notable interest, with Rs125 billion accepted from competitive bidders and Rs6 million in non-competitive bids, signaling sustained demand for long-term securities.
By contrast, shorter tenors recorded far lower demand. The 5-year bond, despite its 11 percent coupon rate, saw only Rs5.9 billion in competitive bids accepted—just 2.7 percent of the Rs220 billion offered for that tenor. This pattern underscores a cautious outlook among investors regarding short-term inflation trends and monetary policy uncertainty.
In terms of yields, there was a mixed movement across maturities. The cut-off yields rose slightly for shorter tenors, with the 2-year bond climbing by 13 basis points to 11.3292 percent and the 3-year increasing by 21 basis points to 11.3493 percent. The 5-year bond saw a marginal increase of 6 basis points to 11.4999 percent. On the other hand, the yields for the 10-year and 15-year bonds eased slightly, declining by 4 basis points each to 12.00 percent and 12.34 percent respectively.
Non-competitive bids remained a relatively small component of the total accepted amount. The 5-year bond attracted the largest non-competitive allocation of Rs6.97 billion, followed by Rs5.47 billion for the 2-year and Rs2.36 billion for the 3-year bonds.
Analysts note that the auction results reflect a clear investor tilt toward longer-term maturities, likely driven by expectations of interest rate stability or a possible downward shift in the medium to long term. The softer yields on longer maturities suggest growing market confidence in macroeconomic stability and expectations of a less aggressive monetary stance in the future.
The relatively muted demand for shorter-term bonds highlights lingering caution over near-term inflationary pressures and potential monetary policy adjustments. However, the strong overall participation in the auction demonstrates sustained investor confidence in government securities as a preferred investment channel.
This latest PIB auction reinforces the central bank’s strategy to manage its borrowing profile through a balanced maturity structure while tapping into available market liquidity. The shift in demand patterns may also influence future issuance strategies and yield curve dynamics as Pakistan’s financial markets respond to evolving macroeconomic signals.
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