The government yesterday,increased cut-off yields on Pakistan Investment Bonds (PIBs) to encourage banks and others to invest in long-term papers.
However, the current fiscal year’s first auction of PIBs witnessed a fall in investors’ interest as the amount realised was Rs56 billion against the target of Rs100bn.
The cut-off yield on three-year PIBs was raised by 29 basis points to 12.38 per cent. Of Rs56bn, the highest amount (Rs32.2bn) was invested in three-year PIBs.
Experts watching the development said the increase in the cut-off yields ahead of monetary policy announcement, scheduled on July 19, could be significant.
“The amounts auctioned were small, and the central bank could have rejected the higher bids, therefore higher cut-offs could imply higher interest rates in the near future,” said Faisal Mamsa of Landmark Capital.
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