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Circulars

Day Count Convention of Pakistan Investment Bonds

December 10, 2015
9372

The Presidents/ Chief Executives
Primary Dealers

Dear Sirs/ Madam,

Day Count Convention of Pakistan Investment Bonds

Please refer to SBP-BSC Circular No SEC.DIV./U-1/PIB/Intt./733/2004 on subject of Calculation of Profit on Investment made in Pakistan Investment Bonds and various other instructions issued from time to time for management of Pakistan Investment Bonds. In line with the international best practices, it has been decided to apply Actual/Actual day count for computing profit on investment in Pakistan Investment Bonds; as per the following formula

AI = Face Value × (Coupon Rate / 2) × Day Count Factor

Where:

Day Count Factor = (D2 − D1) / (Days in the Coupon Period)

D1 Start of Coupon Date
D2 Bond Settlement Date
Days in the Coupon Period Actual number of days in the coupon period

The above-mentioned formula shall be effective from 4th January, 2016 and shall be applicable to all issues of Pakistan Investment Bonds.

Yours sincerely,

Muhammad Faisal
Senior Joint Director