KARACHI - The Government raised a net amount of Rs64.31 billion, as against the target of Rs60 billion, through the auctions of Pakistan Investment Bonds (PIBs during 2009-10 (FY10) mainly due to reopening of the previous issues throughout the year, according to SBP Annual Report on the working of the Bank (Performance Review) for the year 2009-10 released recently. The report stated that investors seemed most interested in 10-year PIBs, as about 60 per cent of the money was raised through this tenor. As a result of these borrowings, the outstanding balance of the PIBs increased to Rs 505.29 billion at the end of FY10 compared to Rs 440.99 billion at the end of FY09. MARKET TREASURY BILLS A net amount of Rs467 billion (face value) was generated by the Government by means of Market Treasury Bills (MTBs) in 2009-10 compared to net Rs304 billion in the previous year. A total of 25 auctions were held by SBP during the year in which the primary dealers offered an accumulative amount of Rs3.2 trillion against the target amount of Rs1.36 trillion. In an effort to broaden the investor base, SBP allowed non-competitive bids in June 2009 - a process that allows individuals, small investors and non-banks to invest directly in MTBs. A total amount of Rs20 billion (face value) was raised through non-competitive bids during FY10. Mutual funds remained the most active non-bank investors in the MTBs capturing 63 per cent share in total amount raised via noncompetitive bids. SBP is also working in collaboration with National Institutional Facilitation Technologies (Pvt) Ltd, to develop a web portal where retail investors will be able to place noncompetitive bids directly in each auction, Report said. GOVERNMENT IJARA SUKUK The issuance of Government of Pakistan Ijara Sukuk which had been a longstanding need of Islamic banking industry has also served as a new source of funds for the Government. The Report revealed that during FY10 government conducted only one Sukuk auction of 3-year tenor amounting to Rs15.32. A total of four tranches of GoP Ijara Sukuk had been issued since its introduction in 2008 amounting to Rs42.24 billion. E-BOND: ELECTRONIC BOND TRADING PLATFORM As a major step in the development of fixed income markets in Pakistan, an electronic fixed income trading platform provided by Bloomberg called EBND was launched on January 11, 2010. The platform is currently being used for trading of government securities only; however, it has the capacity to support trading of corporate debt instruments as well. EBND which is already in use in 18 countries has the following key features: n A central display provides the best live quotes by price makers of all outstanding issues. n Dissemination of real time information to investors on transactions in fixed income market. n Price takers can approach multiple price makers for firm quotes. n Choice for price makers to enter and trade on firm, anonymous orders. n Facilitate for users to customize their counterparty credit database. n Option to manually input any bilateral deal which is not concluded on Bloomberg through a Voice Trade Capture feature. n Although this is a front-end system, straight through processing interface is possible with local settlement systems and banks internal systems as it is based on FIX protocol. The report predicted that the introduction of this platform is expected to provide not only a boost to fixed income market; it also has a lot for all market participants. The availability of real-time information about yields and turnover will help the issuer in determining demand for its paper and make better funding decisions. Moreover, the platform is likely to attract more investors to the market as the price discovery process becomes much easier resulting into enhanced liquidity and lower liquidity premium. This will also result in further development of liquid yield curves for various market segments. With the availability of a widened investor base, banks would be able to shift Govt debt from their books freeing up funds for private sector credit, it said. The fact that Bloomberg is offering its services in all major financial markets in the world is another advantage of the system as it will provide international investors with an additional window on Pakistans economy, it added.