KARACHI: Margin on all short-term government security papers declined up to 95 basis points (bps) following the recent cut in the key policy rate.
The State Bank of Pakistan (SBP) conducted the auction for the sale of 3-, 6- and 12-month Market Treasury Bills (MTBs) on Tuesday and received bids amounting to Rs 585.75 billion with realized value of Rs 564.8 billion. The auction was held on June 30, as bank holiday was announced on July 1 for closing of accounts.
Most of the bids were received for 3-month period due to lower margins. The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP), in its emergent meeting held on June 25, further cut the key policy rate by 100 basis points (bps) to 7 percent aimed to address the domestic economic slowdown due to COVID-19.
Some Rs 258.5 billion bids were received for 3-month, Rs 157.4 billion for 6-month and some Rs 169.77 billion worth bids were submitted for 12-month period.
Out of the received bids, the federal government accepted bids amounting to Rs 16.103 billion with a realized amount of Rs 15.12 billion.
The cut-off yield of all short-term government bonds witnessed a downward trend and margin on T-bills fell up to 95 basis points (bps) in the auction held on June 30, 2020 compared to previous auction held on June 17, 2020.
The cut-off yield of 3-month MTBs was fixed at 6.8488 percent, down by 95 bps, from 7.7999 percent with borrowing amount of Rs 853 million. Bids worth Rs 250 million were accepted for 6-month MTBs and its cut-off yield was declined by 83 bps to 6.6599 percent.
The federal government borrowed some Rs 15 billion through the auction for 12-month T-bills at 6.8500 percent compared to 7.3600 percent in the previous auction.
Copyright Business Recorder, 2020
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