SBP sells T-bills worth Rs283bn, yields drop by up to 59bps

January 10, 2024 (MLN): The State Bank of Pakistan (SBP) conducted an auction on Wednesday in which it sold Market Treasury Bills (MTBs) worth Rs283.24 billion for 3,6 and 12 months against a target of Rs100bn.

Cut off yields for 3, 6, and 12 months were 20.9996%, 20.9601%, and 20.8449%.

This means that the cut-off yields for 3, 6, and 12 months fell by 45bps, 44bps, and 59bps respectively.

Despite a target of just Rs100bn and a maturing amount of Rs122bn, market participation remained heightened, with the SBP receiving bids worth Rs2.755tr.

Investors continued to ramp up their bets on an interest rate cut in the coming months, as can be seen by the huge participation, with the investors aggressively trying to secure higher yields before the anticipated rate drop.

The SBP received bids worth Rs568.2bn for 3 months, Rs76.76bn for 6 months, and Rs2.11tr for 12 months out of which it accepted Rs5.71bn for 3 months, Rs6.5 million for 6 months, and Rs211.08bn for 12 months.

In addition, the SBP picked up Rs66.44bn from the non-competitive auction, making the total amount accepted Rs283bn.

The bid-to-cover ratio, which shows the amount of bids received versus the amount sold, rose to 9.73 as against 1.4 in the previous auction. In other words, the SBP only accepted about 10.28% of the total bids it received.

To note, the central bank in the last auction held on December 27, 2023 sold MTBs worth Rs2tr, which was almost four times the target of just Rs510bn.

Cut-off yields for 3, 6, and 12 months were 21.448%, 21.3999%, and 21.43%.

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