Govt cuts treasury bill yields by up to 85bps

November 27, 2024 (MLN): The State Bank of Pakistan (SBP) conducted an auction on Wednesday in which it sold Market Treasury Bills (MTBs) worth Rs616.06 billion.

The target was to raise Rs800bn while the maturity amount was Rs918bn.

Cut off yields stood at 12.9974% (-70bps) for 3 months, 12.8948% (-61bps) for 6 months, and 12.3500% (-85bps) for 12 months.

In today's auction, cut-off yields dropped to their lowest level since April 6, 2022, hitting an approximate 31-month low.

Total amount offered was Rs2.3tr, with the SBP receiving bids worth Rs632.32bn for 3 months, Rs531.15bn for 6 months, and Rs1.13tr for 12 months.

Out of this, SBP accepted Rs121.09bn for 3 months, Rs54bn for 6 months, and Rs305bn for 12 months.

In addition, the central bank picked up Rs135.97bn from the non-competitive auction, making the total amount accepted Rs616.06bn.

The bid-to-cover ratio, which shows the amount of bids received versus the amount sold, rose to 3.73 as against 3.04 in the previous auction. In other words, the SBP accepted about 26.8% of the total bids it received.

To note, the central bank in the last auction held on November 13, 2024 sold MTBs worth R820bn against a target of Rs400bn.

Cut-off yields for 3, 6, and 12 months were 13.7%, 13.4999%, and 13.1999%.

The sharp decline in yields is due to strong expectations of further interest rate cuts, driven by signs of continued easing in inflation during November.

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