Auction Result: Govt raises Rs500.5bn through T-bills

May 29, 2024 (MLN): The State Bank of Pakistan (SBP) conducted an auction on Wednesday in which it sold Market Treasury Bills (MTBs) worth Rs500.51 billion.

The target was to raise Rs360bn while the maturity amount was Rs298bn.

Cut off yields stood at 21.0001% (-60bps) for 3 months, 21.0000% (-29bps) for 6 months, and 20.1001% (-31bps) for 12 months.

Ahead of the monetary policy announcement on June 10, 2024, the last scheduled T-bill auction witnessed a fall in cutoff rates across all tenors, said Shahid Ali Habib, CEO Arif Habib Limited (AHL).

"This decline reflects the market's expectation of a rate cut in the upcoming monetary policy, supported by low inflation, a narrowing current account deficit, and other economic indicators showing signs of recovery," he added.

The auction saw participation of Rs1.18tr, with the SBP receiving bids worth Rs390.64bn for 3 months, Rs255.01bn for 6 months, and Rs539.18bn for 12 months.

Out of this, SBP accepted Rs122.4bn for 3 months, Rs70.42bn for 6 months, and Rs182.98bn for 12 months.

In addition, the central bank picked up Rs124.71bn from the non-competitive auction, making the total amount accepted Rs500.51bn.

The bid-to-cover ratio, which shows the amount of bids received versus the amount sold, dropped to 2.37 as against 2.94 in the previous auction. In other words, the SBP accepted about 42.2% of the total bids it received.

To note, the central bank in the last auction held on May 15, 2024 sold MTBs worth Rs639.5bn against a target of Rs450bn.

Cut-off yields for 3, 6, and 12 months were 21.5973%, 21.2899%, and 20.4052%.

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