Circulars/Notifications - Domestic Market & Monetary Management Department  
 DMMD Circular No. 09 of 2018

May 07, 2018 

The Presidents/Chief Executive Officers
All Banks/Primary Dealers

Floating Rate Pakistan Investment Bonds

Government of Pakistan (GOP) has decided to issue Pakistan Investment Bonds (PIBs) with floating rate coupon under Pakistan Investment Bonds Rules, 2000. The detailed guidelines regarding issuance and other operational details of floating rate PIBs are as under:-

A. Eligibility:

1. Only Primary Dealers (PDs) of government securities (MTBs & PIBs) will be eligible to participate in the competitive auctions and submit Non-Competitive Bids (NCBs) on behalf of eligible investors.

B. Determination of Floating Rate Coupon:

1. The coupon rate on the floating rate PIBs will be equal to the benchmark rate plus/minus a margin decided in the auction. Benchmark rate would be the weighted average yield of the 6-month Market Treasury Bills (MTBs) as determined in the latest successful 6-month MTB auction held prior to the floating rate PIB’s auction and/or the start of the coupon period.

2. The coupon will be paid and reset semi-annually, according to the procedure explained above.

C. Auction Process:

1. The floating rate PIBs will be issued at face value through uniform price competitive bidding auction process conducted by State Bank of Pakistan.

2. Primary Dealers will be required to place bids as margin over / under the benchmark rate. Margin has to be specified in terms of bps over/under the benchmark rate. Minimum bid size will be PKR 100,000 and in multiples thereof. Primary Dealers will be free to place multiple bids.

3. The cut-off margin over the benchmark rate (at and below which GOP decides to accept all bids) will apply uniformly to all accepted bids. This margin will remain fixed over the entire tenor of the floating rate PIB.

4. Auction will be conducted using Bloomberg online module. In case there is internet connectivity issue, PD may submit bids manually as per format attached as ‘Annexure-A’.

D. General Instructions:

1. The bids may be accepted either in full or on pro-rata volume basis as per DMMD Circular no. 6 of 2018. The participation in the auction through NCBs will also be as per the procedure described in the above circular.

2. Floating rate PIBs will be subject to issue wise holding limit as described in DMMD circular no.12 of 2012 as amended by SBP from time to time.

3. All other rules and regulations applicable to PIBs with fixed rate coupon shall also be applicable on floating rate PIBs (e.g. SLR eligibility, securities classification and use of securities for liquidity management).

4. Bids can be rejected without assigning any reason thereof.



Yours truly,


(Muhammad Amin Khan Lodhi)
Director, DMMD

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