Margin on all short-term government papers further declined in the auction held Wednesday, mainly due to expected ease in monetary policy. The State Bank of Pakistan (SBP), on September 25, 2019, conducted the auction for the sale of 3-, 6- and 12-month Market Treasury Bills (MTBs) and received bids amounting to Rs 1.173 trillion with realized value of Rs 1.044 trillion. The received bids were higher than the target of Rs 1.0 trillion for this auction, which included Rs 885.8 billion maturity and an additional amount of Rs 114.12 billion.
Bankers said that most of the bids were received for 12-month period as the market is expecting some cut in policy rate in future. The monetary policy committee in its last meeting held on Sep 16, 2019 kept the interest rate unchanged at 13.25 percent as it believed that current policy rate is suitable to keep inflation contained.
Some Rs 112.946 billion bids were received for 3-month, Rs 71.425 billion for 6-month and some Rs 988 billion worth bids were submitted for 12-month period.
Out of the received bids, the federal government accepted bids amounting to Rs 531.514 billion with a realized amount of Rs 478.19 billion against the tentative target of Rs 1 trillion.
The cut-off yield of all short-term government bonds witnessed a downward trend and margin on T-bills fell up to 9 basis points (bps) Wednesday compared to previous auction held on September 11, 2019.
The cut-off yield of 3-month MTBs was fixed at 13.7300 percent down from 13.7397 percent with an amount of Rs 107.746 billion. Bids worth Rs 20 billion were accepted for 6-month MTBs and its cut-off yield was set at 13.8390 percent, down 9 bps.
The federal government borrowed some Rs 403.767 billion through the auction for 12-month T-bills at 13.8499 percent compared to 13.9300 percent in the previous auction.
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