SBP raises Rs506bn in PIB Auction amid cautious demand for longer tenors

Auction Summary

• Total Bids Offered: Rs1.54 trillion
• Total Bids Accepted (Face Value): Rs506.73 billion
• Cut-off Yields: Mostly inched up for up to 5 years, but came down for 10 and 15 years

The lion’s share of accepted bids came from the 10-year bond, with the SBP accepting Rs333.4 billion in competitive bids and an additional Rs4 billion in non-competitive bids, totaling Rs337.4 billion, or two-thirds of the total acceptance.

The 15-year zero-coupon PIB also attracted significant demand, with Rs125 billion accepted from competitive bidders and a nominal Rs6 million from non-competitive bids.

In contrast, shorter-tenor bonds saw much smaller uptake.

The 5-year bond, despite offering an 11% coupon, saw only Rs5.9 billion in competitive bids accepted, a mere 2.7% of the Rs220 billion offered.

Yields rose slightly for bonds with maturities of up to 5 years, while the yields for 10- and 15-year bonds declined modestly, suggesting that investors expect rate stability or a downward shift in the longer term.

Non-competitive bids made up a relatively small share of total accepted amounts, with the largest allocation going to the 5-year bond (Rs6.97 billion), followed by the 2-year (Rs5.47 billion) and 3-year (Rs2.36 billion).

The auction results reflect a clear investor tilt toward longer-term instruments, possibly indicating expectations of interest rate normalization or confidence in long-term macroeconomic stability.

The muted response to shorter tenors suggests cautious sentiment over near-term inflation and monetary policy trends.