Historic T-bill buyback aims to reprofile Pakistan's debt

News Image

By MG News | September 30, 2024 at 11:32 AM GMT+05:00

0:00

September 30, 2024 (MLN): The State Bank of Pakistan (SBP) will repurchase Market Treasury Bills (MTBs) today for the first time in history—a liability management tool widely used globally in government securities markets to manage refinancing and liquidity risks—with a target of Rs500 billion.

Bond buybacks will enable the Government of Pakistan to retire its outstanding debt before its maturity date. This move allows the government to reprofile its debt, potentially benefiting from lower interest expenses in the long run and correcting market distortions.

“The Government of Pakistan's decision to buy back its own T-bills for the first time is a significant development, reflecting an improving cash position and offering various positive implications for the economy,” said Mohammad Sohail, CEO Topline Securities.

“The sharp decline in yields, with 1-year T-bills falling from 23% to around 14% and the 10-year bond from 17% to 12.7%, indicates a faster-than-expected easing in interest rates. This strategic buyback will likely enhance liquidity in the money market, driving yields down further, while improving the government's debt metrics,” he highlighted.

Sohail added that by repurchasing its own debt, the government can optimize its debt profile, potentially reducing the overall debt ratio.

“This approach also shows confidence in the fiscal position, with benefits for both short-term money market operations and long-term fiscal sustainability,” he stated.

He further noted that lower yields might signal greater investor confidence and could encourage more private-sector investment, stimulating broader economic growth.

In light of this historic step by the Government of Pakistan, similar mechanisms can be implemented by the corporate sector.

The Securities and Exchange Commission of Pakistan (SECP) should encourage corporations to engage in bond buybacks, as this could optimize their debt profiles

Copyright Mettis Link News

Related News

Name Price/Vol %Chg/NChg
KSE100 133,604.93
158.51M
0.18%
234.78
ALLSHR 83,325.21
553.58M
0.29%
244.06
KSE30 40,751.45
60.03M
0.11%
46.15
KMI30 192,660.57
68.47M
0.04%
79.90
KMIALLSHR 55,930.70
323.88M
0.17%
94.99
BKTi 36,473.77
9.83M
0.43%
156.60
OGTi 28,539.71
6.97M
-0.01%
-3.25
Symbol Bid/Ask High/Low
Name Last High/Low Chg/%Chg
BITCOIN FUTURES 108,675.00 108,880.00
107,680.00
220.00
0.20%
BRENT CRUDE 69.35 69.50
69.03
-0.23
-0.33%
RICHARDS BAY COAL MONTHLY 97.50 0.00
0.00
2.90
3.07%
ROTTERDAM COAL MONTHLY 106.00 106.75
106.00
0.25
0.24%
USD RBD PALM OLEIN 998.50 998.50
998.50
0.00
0.00%
CRUDE OIL - WTI 67.61 67.97
67.40
-0.32
-0.47%
SUGAR #11 WORLD 16.25 16.46
16.07
-0.13
-0.79%

Chart of the Day


Latest News
July 08, 2025 at 12:04 PM GMT+05:00

Saudi Riyal available at PKR 76.4 in open market


July 08, 2025 at 11:55 AM GMT+05:00

NBP leads Pakistan’s banks in shareholder value surge


July 08, 2025 at 11:39 AM GMT+05:00

Pakistan-Afghanistan railway talks progress


July 08, 2025 at 10:42 AM GMT+05:00

Pakistan moves to regulate crypto with PVARA approval



Top 5 things to watch in this week

Pakistan Stock Movers
Name Last Chg/%Chg
Name Last Chg/%Chg