August-October: SBP to auctions for T-bills, bonds worth Rs1.575t

Govt aims to borrow Rs150b through PIBs of three, five, 10 and 20 years of maturity.

KARACHI: The State Bank of Pakistan (SBP) will hold auctions for Pakistan Investment Bonds (PIBs) and Market Treasury Bills (MTBs) of different maturities amounting to a total of Rs1.575 trillion in August-October.

According to the auction calendar released by the SBP on Tuesday, the government will raise Rs1.425 trillion via seven MTB auctions in August-October. Two auctions will take place in August and October each while three auctions will be held in September.

The MTB target for each auction ranges from a maximum of Rs300 billion (to be held on August 19) to a minimum of Rs125 billion (to be held on September 30).

Almost 85% of the total MTB auction target of Rs1.425 trillion for the three-month period represents the federal government’s ‘maturing amount’. This means the ‘additional requirement’ of the federal government for August-October is only Rs217 billion, or 15.2% of the auction target.

The government aims to borrow a total of Rs150 billion in August-October through PIBs of three, five, 10 and 20 years of maturity. The target for the three auctions -- to be held on August 12, September 9 and October 7 - is Rs50 billion each.

Unlike the MTB auction target where the maturing amount exceeds the additional requirement, the maturing amount in the case of the PIB auction constitutes only one-third of the target for August-October.

Tenders for the sale of PIBs are invited by the SBP from primary dealers on each respective auction date through Bloomberg Online Auction. Primary dealers form a select group of 11 banking institutions for 2014-15 that participates in the trading of government papers in the primary market by bidding in the SBP auctions.

Published in The Express Tribune, August 5^th, 2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.