Why bond market couldn’t thrive in Pakistan

  • Abstract
  • Keywords
  • References
  • PDF
  • Abstract

    Fixed income market has recently emerged in Pakistan. Onward 1990, prolusion of government securities paved a way for corporates to come forward with their debt papers and long term yield curve came in to existence by introducing FIB’s in 1992 followed by issuance of first Term Finance Certificates (TFC) in 1995. The TFCs’ coupon rate exhibits a wide range of different fixed and floating coupons related to numerous interest rates containing the discount rate, the Karachi Inter-bank Offer Rate (KIBOR) and Pakistan Investment Bond (PIB) rates. The SBP launched electronic trading platform for fixed income securities on 11th January, 2010 with the intention of improving the functioning and profundity of primary and secondary markets of sovereign bonds. The data available reveals that through this platform, the cumulative trading of sovereign securities touched 66% of the overall trading volume till the end of 2010 relative to 58.0% in January, 2010. In its initial stage, the E-bond platform provided the complete trading of sovereign bonds like T-bills, PIBs and Ijarah Sukuk. The other type of fixed income securities like repo, FRAs and swaps facilitated in subsequent phases.

  • Keywords

    Bond; Coupon Rate; Fib’s; Tfc’s; Kibor.

  • References

      [1] Arif, M. (2007). Developing bond market in Pakistan, SBP Research Bulletin, 3 (1). Retrieved From http://www.sbp.org.pk/research/bulletin/2007/vol3/Bond-Market-Pakistan.pdf.

      [2] Fiscal policy and public debt. (n.d.) Retrieved from http://www.sbp.org.pk/reports/quarterly/fy16/Second/Chap-4.pdf.

      [3] Hameed, F. (2007). Fostering the corporate bond market in Pakistan. SBP Research Bulletin, 3(1). Retrieved from http://www.sbp.org.pk/research/bulletin/2007/vol3/Corporate- Debt-Market.pdf.

      [4] Non-bank financial institutions. (n.d.) Retrieved from http://www.sbp.org.pk/FSR/2013/FirstHalf/pdf/Chapter-6.pdf.

      [5] Role of government in facilitating development of the bond market. (n.d.). Retrieved from http://www.sbp.org.pk/fsr/2010/pdf/1RoleofGovernment.pdf.

      [6] SBP, SECP joint task force set up to establish vibrant corporate debt market. (2012). Retrieved from http://www.sbp.org.pk/press/2012/TaskForce-06-Mar-2012.pdf.

      [7] Uppal, J. Y. (2011). Government budget deficits and the development of the bond market in Pakistan: issues and challenges. The Lahore Journal of Economics, 16, 159-198.

      [8] Retrieved from Government%20Budget%20Deficit%20-%2017th.pdf.




Article ID: 6501
DOI: 10.14419/ijaes.v5i1.6501

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