Auction Result: Cut-off yield jumps to 25%

September 07, 2023 (MLN): The State Bank of Pakistan (SBP) conducted an auction on Wednesday in which it sold Market Treasury Bills (MTBs) worth Rs1.332 trillion for 3, 6, and 12 months against a target of Rs1.95tr.

Cut-off yields for 3, 6, and 12 months jumped significantly to 24.5%, 24.787%, and 25.0687%.

This means that the cut-off yields showed a rise of 162bps for 3 months and 213bps for 12 months as compared to the last auction held on August 23.

This takes the cut-off yields to the highest level since 1998, and confirms the largely anticipated rate hike by experts of up to 200-300bps in the upcoming Monetary Policy Committee (MPC) meeting scheduled for September 14.

The total amount offered was Rs1.974tr out of which the SBP accepted Rs1.332tr.

The SBP received bids worth Rs1.34tr for 3 months, Rs316bn for 6 months, and Rs316.2bn for 12 months out of which it accepted Rs1.22tr for 3 months, Rs35bn for 6 months, and Rs35.2bn for 12 months.

In addition, the SBP picked up Rs40.24bn from the non-competitive auction, making the total amount accepted Rs1.332tr.

To recall, in the last auction conducted on August 23, SBP sold MTBs worth Rs2.07tr against a target of Rs2.25tr, at a cut-off yield of 22.88% for 3 months and 22.94% for 12 months, while the bids were rejected for 6 months.

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