NBP
Treasury a market price maker and trend setter
in the plain vanilla Foreign Exchange products.
It’s ability to offer tight prices, coupled with
timely and accurate research making it a bank
of choice for clients seeking to favorably position
their currency risk As a result, National bank
has one of the largest FX book in the country.
NBP Rate Sheet
Pakistan Investment Bonds
Pakistan
Investment Bonds issued by Government of Pakistan
are a preferred means for a majority of institutional
investors to invest their surplus funds for
a longer time horizon. This way they are able
to lock a higher yield for a relatively long
term rather than take the risk of re-pricing
after relatively shorter time periods. Furthermore,
PIBs are highly secured and risk free as they
are guaranteed by the government of Pakistan.
NBP
is the leading Primary Dealer for PIBs primarily
because of its inventory size and the appetite
for such a long-term instrument given its deposit
base. While most foreign / private banks would
have to go to the secondary market in order
to satisfy a large order from an institutional
investor, NBP can execute such large orders
through its own book. This means that it can
offer tight prices for large amounts even under
volatile market conditions.
Derivatives
Products
NBP
treasury has been at the forefront in developing
the derivatives market in Pakistan and has contributed
both individually and from the FMA (Financial
Market Association) front as well. The first
ever Derivative transaction of the Pakistani
banking sector was done by NBP. Some of the
more common derivative structures being offered
include:
Currency
Options
Hedges
Foreign Exchange Risk
An option gives the buyer the right
but not the obligation to buy or
sell an asset at a pre-specified
date and price. So the upside profit
potential is unlimited whereas the
downside loss is protected at a
pre determined level. Various structures
of currency options are available
including:
Knock-ins
/ Knock outs,
Participating
Forwards,
and many more
Interest
Rate Swaps and FRAs
Hedges
the Interest Rate Risk
A client can convert a fix rate
loan into floating rate one or vice
versa by using these derivative
instruments. This allows the clients
to develop and implement their views
about the evolving interest rate
scenario. For example, if the borrower
feels that the interest rate might
go up in the future, than he may
choose to enter into a Pay Fixed
– Received Floating swap with its
bank to effectively hedge its floating
rate loans.
Cross
Currency Swaps
Hedges
the Interest Rate Risk
This product allows a client to
convert its rupee based loans into
a dollar based loan. The client’s
exposure is shifted from PKR KIBOR
to USD LIBOR.
