Islamabad, Feb 5: The cut-off yields on Treasury Bills (T-Bills) saw an increase of up to 21 basis points (bps) during the latest auction held on Tuesday. Data from the State Bank of Pakistan (SBP) shows that the government successfully raised Rs. 452 billion, slightly surpassing its target of Rs. 450 billion. This was achieved despite a total participation of Rs. 918 billion.
Breaking down the yields, the cut-off yield for the 3-month T-Bills rose by 21 bps to reach 11.7998%, while the 6-month T-Bills saw a 10 bps increase, bringing its yield to 11.5048%. Similarly, the 12-month T-Bills saw a 20 bps rise, with its yield now at 11.5898%.
In terms of the total amount raised, the government generated Rs. 153.2 billion through competitive bids for the 3-month T-Bills. Additionally, Rs. 28 billion was raised for the 6-month T-Bills, and Rs. 212 billion for the 12-month T-Bills, which together contributed to the Rs. 393.7 billion raised from the competitive portion of the auction.
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Furthermore, the government raised an additional Rs. 58.2 billion through non-competitive bids, pushing the total amount raised in the auction to Rs. 452 billion. The outcome of this auction reflects the government’s ability to successfully meet its target while experiencing increased participation from investors, highlighting strong demand for short-term government securities despite higher yields. This development also signals a steady investor appetite for risk-free instruments in the current economic environment.
This auction also offers insights into market sentiment, as higher yields on T-Bills can suggest a response to inflationary pressures or expectations of tighter monetary policy by the central bank. It’s clear that the government’s strategy to raise funds through short-term borrowing is resonating with the market, as evidenced by the strong demand and the increase in yields across the various tenures.
