ISLAMABAD – After seeing an increasing interest in T’bills, Pakistan wantsto offer longer-tenor securities to the global investors, reported Bloomberglink.
The State Bank of Pakistan is considering different ways to raise liquidityand improve price discovery in the debt market in order to ensure that theforeign funds stay invested for a longer tenor.
The sticky money will boost the efforts to overturn Pakistan’s economywhich is riddled with high debt, low growth and low foreign currencyreserves, stated the report.
Reza Baqir, Governor State Bank of Pakistan explained to Bloomberg thatthey’re looking to create “deeper pockets along the yield curve”.
He added,
Having deeper segments means that these instruments become more attractiveto non-residents as well because they want turnover in the secondary market.
In this fiscal year which started in July, the foreign investors haveinvested around $1.2 billion into local-currency bonds, which is higherthan the investment they have made in the debt in the past four years, SBPdata shows.
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This was due to an increase in Pakistan’s policy rate to 13.25%, which hasbeen doubled over the past years and is standing — the highest in Asia.
Overall, the rising pool of negative-yielding debt globally has attractedinterest in Pakistan’s securities.
According to the Financial Markets Association of Pakistan, all that moneyhas been invested into Treasury bills — which have a maximum holding periodof 1 year. Baqir wants to increase this period.
SBP is devising a strategy with the finance ministry, which includes bondbuybacks and other measures. “There are many scattered issues from marketliquidity and transparency and price discovery,” Baqir told Bloomberg.
