National Savings Bonds attract Rs3.6 billion
By Dilawar
KARACHI, Jan 27: The National Savings Bonds (NSBs) launched by the Finance Minister Shaukat Tarin on Jan 12 secured subscription of Rs3.6 billion for the 15 days during the time the register was open for subscription till Tuesday.
National Savings Organisation (NSO) claims fame for the launch of Pakistan’s first ever scripless, tradable government security. The Bonds would seek entry into the stock exchanges on Feb 25.
Director General NSO, Zafar M. Shaikh, told Dawn on Wednesday that he thought the public response to the NSB offer was ‘great’, given the lacklustre market conditions and the liquidity crunch. He said that the Bonds had gone to create public awareness about savings and investments. “Though the subscription closed on Jan 26, the launch of more tradable bonds will be a regular feature”, said he, arguing that the failure of FIBs in 1991 was because of the government’s decision to plug supplies”.
The DG of NSO believed that the Bonds would deepen the domestic debt market, which currently offered investment opportunities in only TFCs and the PIBs.
Several market watchers rolled their eyes in disapproval of public enthusiasm over the Bonds. “The Bonds could secure pretty smaller amount, compared to other National Savings Securities”, said one.
Already managing over Rs1 trillion in various schemes, Zafar Shaikh informed that the target for the current year to seek investments into various NSS was set at Rs240 billion, of which Rs120 billion was already received in six months of the year to December.
He said that in the comparable period of last year, the schemes had fetched only Rs48 billion, but the aggregate for that year had climbed to Rs267 billion. The DG of NSO said that he was sanguine that the target would be surpassed this year as well, his reason being that historically, the flow of money into savings schemes picks up pace in the second half of the year. “Over 90 per cent of savers in NSS represent the lower and middle class population with each individual placing amounts of Rs10 million and lesser,” he said.
An investor sympathetic to the NSBs said that the amount of aggregate investment in Bonds looked smaller also because of a lot of paperwork that was required to be done by the subscribers. They had to have a duly verified bank account and to maintain an Investor account/sub-account with the Central Depository Company (CDC).
But at the bourses, equity dealers were showing little inclination for several of them consider a fixed income instrument to be a ‘de-motivating product’ for the equities. “Granted that the over-thecounter tradable PIBs with comparable rates of return are already available in the secondary market, those are the instruments in which banks and high-net-worth individuals deal”, he said, but what of TFCs? As little as Rs50 million worth of average daily turnover is recorded in TFCs, in the aggregate average daily turnover of Rs8 to 10 billion in all of the capital market.
NSS officials were, nonetheless, putting their trust in investors who they believed would be attracted by the high fixed interest rate starting 12.5 per cent for threeyear bonds. Analysts thought that it had to be seen if too many investors would prefer to shift cash from NSS schemes to bonds. “Promising a higher rate of return at 12.5 per cent, cash would be tied up for three years, unless Bonds are briskly traded at the Exchange”, said one and asked if investor would go for around one per cent higher rate offered by the 3-year Bond over the Special Savings Accounts (11.6 per cent) with the latter invested with the inherent advantage of over-thecounter liquidation into cash at any time.
karachi, jan 27: the national savings bonds (nsbs) launched by the finance minister shaukat tarin on jan 12 secured sub- scription of rs3.6 billion for the 15 days during the time the register was open for sub- scription till tuesday. national savings organisation (nso) claims fame for the launch of pakistan’s first ever scripless, tradable government security. the bonds would seek entry into the stock exchanges on feb 25. director general nso, zafar m. shaikh, told dawn on wednesday that he thought the public response to the nsb offer was ‘great’, given the lacklustre market conditions and the liquidity crunch. he said that the bonds had gone to create pub- lic awareness about savings and investments. “though the subscription closed on jan 26, the launch of more tradable bonds will be a regular fea- ture”, said he, arguing that the failure of fibs in 1991 was because of the government’s decision to plug supplies”. the dg of nso believed that the bonds would deepen the domestic debt market, which currently offered in- vestment opportunities in on- ly tfcs and the pibs. several market watchers rolled their eyes in disapprov- al of public enthusiasm over the bonds. “the bonds could secure pretty smaller amount, compared to other national savings securities”, said one. already managing over rs1 trillion in various schemes, zafar shaikh informed that the target for the current year to seek investments into vari- ous nss was set at rs240 bil- lion, of which rs120 billion was already received in six months of the year to december. he said that in the compa- rable period of last year, the schemes had fetched only rs48 billion, but the aggre- gate for that year had climbed to rs267 billion. the dg of nso said that he was san- guine that the target would be surpassed this year as well, his reason being that histori- cally, the flow of money into savings schemes picks up pace in the second half of the year. “over 90 per cent of sav- ers in nss represent the lower and middle class population with each individual placing amounts of rs10 million and lesser,” he said. an investor sympathetic to the nsbs said that the amount of aggregate invest- ment in bonds looked smaller also because of a lot of paper- work that was required to be done by the subscribers. they had to have a duly verified bank account and to maintain an investor account/sub-ac- count with the central depository company (cdc). but at the bourses, equity dealers were showing little in- clination for several of them consider a fixed income in- strument to be a ‘de-motivat- ing product’ for the equities. “granted that the over-the- counter tradable pibs with comparable rates of return are already available in the secondary market, those are the instruments in which banks and high-net-worth in- dividuals deal”, he said, but what of tfcs? as little as rs50 million worth of average daily turnover is recorded in tfcs, in the aggregate aver- age daily turnover of rs8 to 10 billion in all of the capital market. nss officials were, none- theless, putting their trust in investors who they believed would be attracted by the high fixed interest rate start- ing 12.5 per cent for three- year bonds. analysts thought that it had to be seen if too many investors would prefer to shift cash from nss schemes to bonds. “promising a higher rate of return at 12.5 per cent, cash would be tied up for three years, unless bonds are briskly traded at the exchange”, said one and asked if investor would go for around one per cent higher rate offered by the 3-year bond over the special savings accounts (11.6 per cent) with the latter invested with the in- herent advantage of over-the- counter liquidation into cash at any time.
http://epaper.dawn.com 28-01-2010