KARACHI (October 08 2003): The government has amended Pakistan Investment Bonds Rules to allow issue of 15 and 20 years bonds. The State Bank of Pakistan issued a circular on Tuesday carrying a government notification, which has effected changes in the PIB Rules 2000.
The decision about the 15 and 20 years bonds got immediate reaction from the secondary market where the yield on 10 years PIBs increased.
The rates of ten years bonds went up. But the government notification does not speak about the time of issuance for the long-term bonds.
Also, the government has already announced that the 15 and 20 years bonds would set the benchmark for housing loans.
This was the reason the government would issue these bonds with token amount of about Rs 2 billion.
In the secondary market, 10 years bonds were earlier being traded at 5.95 percent and 6.05 percent, but the announcement about long-term bonds pushed these to 6.15 and 6.20 percent.
“The maturity period of the Bonds shall be three, five, ten, fifteen and twenty years,” said the amendment.
The above amendment has now allowed the Government of Pakistan to issue PIBs of 15 and 20 years' tenor in addition to 3, 5 and 10-year bonds introduced in December 2000, said the SBP circular.
Market experts said the overnight rates were also affected by the decision and the rates increased from 2 percent in the early hours to 2.5 percent, reflecting a shortage of liquidity.
