Understanding Pakistan Investment Bond and Its Advantages

Pakistan Investment Bond is a government-backed investment scheme that offers a fixed return on investment.

It's a low-risk investment option, making it suitable for those who want to earn a stable return without taking on too much risk.

The bond is offered in various denominations, ranging from Rs. 1,000 to Rs. 100,000, making it accessible to a wide range of investors.

Investors can purchase the bond through a network of authorized banks and branches across the country.

Investing in the Pakistan Investment Bond is a hassle-free process, requiring minimal documentation and paperwork.

Investors can earn a fixed return of 6.5% per annum, which is a relatively attractive rate compared to other low-risk investment options.

This return is paid out quarterly, providing a regular income stream for investors.

Pakistan Investment Bonds, or PIBs, are a type of long-term debt security issued by the State Bank of Pakistan on behalf of the federal government.

PIBs are issued in various tenors, ranging from 3 to 30 years, with profit paid semiannually.

The coupon rates for PIBs are determined by the State Bank, Securities and Exchange Commission of Pakistan, and Ministry of Finance.

Primary dealers bid through auctions to purchase the bonds and receive a commission on successful bids.

Investors can earn up to 10% returns on Pakistan Investment Bonds (PIBs), which is a significant attraction.

The returns on PIBs are much higher than the prevailing interest rates being offered in the US, where the Federal Reserve maintained its target for the federal funds rate at a range of 0% to 0.25% in January 2021.

Investors from European countries, which have been badly hit by the Covid-19 pandemic, are looking for higher returns like those offered by PIBs.

Foreign investors invested $240.69m in PIBs during July-March FY21, with $103.09m invested in March alone, the single highest inflow during the current fiscal year.

The US was the largest investor in PIBs, with $115.2m invested during July-March FY21, followed by Luxembourg, which invested $91.9m during the same period.

Investors from the US and Luxembourg are attracted to PIBs because they offer high returns backed by a sovereign guarantee.

The return of up to 10% on PIBs is a major draw for investors, who are looking for high-yielding investments in a low-interest-rate environment.

Pakistan Investment Bonds (PIBs) are a type of long-term debt security issued by the State Bank of Pakistan on behalf of the federal government.

These bonds are issued in denominations of multiples of Rs 100,000/- and are available in tenors of 3, 5, 10, and 20 years. The yield on these bonds is fixed and disbursed semi-annually.

The coupon rate or semi-annual return on these bonds are paid until maturity, making them a good way to earn competitive returns while keeping the investment secure. PIBs are guaranteed by the Government of Pakistan, reducing the chances of a default or any discrepancy in the payouts.

There are two ways to invest in PIBs: either through Primary Dealers/Scheduled Banks or through the Secondary Market/Stock Market. An Investor Portfolio Securities (IPS) Account is opened with the Primary Dealer/Scheduled Bank, allowing an investor to invest in the PIBs.

The non-competitive bidding process allows an investor to take part in the primary auction of the PIB through Primary Dealers. Alternatively, an investor can instruct their bank to buy the PIB(s) through the Exchange by Exchange certified brokers, directly resulting in the ownership of PIB(s).

Investors can reap the rewards of a safe and competitive-returns instrument, earning profit semi-annually at market rate for a period of maturity as deemed fit by the investor.