Govt raises Rs1.3tr through T-bills, yields drop further

December 11, 2024 (MLN): The State Bank of Pakistan (SBP) conducted an auction on Wednesday in which it sold Market Treasury Bills (MTBs) worth Rs1.26 trillion.

The target was to raise Rs1.2 trillion while the maturity amount was Rs2.034tr.

Cut off yields stood at 11.9999% (-100bps) for 3 months, 11.9999% (-89bps) for 6 months, and 12.2999% (-5bps) for 12 months.

The 3-month T-bill yield dropped to its lowest level since March, and the same applies to the 6-month and 12-month T-bills.

Total amount offered was Rs1.93tr, with the SBP receiving bids worth Rs793.37bn for 3 months, Rs371.64bn for 6 months, and Rs763.88bn for 12 months.

Out of this, SBP accepted Rs321.95bn for 3 months, Rs105.62bn for 6 months, and Rs665.68bn for 12 months.

In addition, the central bank picked up Rs163.23bn from the non-competitive auction, making the total amount accepted Rs1.26tr.

The bid-to-cover ratio, which shows the amount of bids received versus the amount sold, dropped to 1.54 as against 4.05 in the previous auction. In other words, the SBP accepted about 65.1% of the total bids it received.

To note, the central bank in the last auction held on November 27, 2024 sold MTBs worth Rs616.06bn against a target of Rs800bn.

Cut off yields stood at 12.9974% for 3 months, 12.8948% for 6 months, and 12.3500% for 12 months.

The sharp decline in yields is due to strong expectations of an interest rate cut in the upcoming MPC meeting, driven by continued easing in inflation during November.

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