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KARACHI: The returns on short-term government papers further increased up to 70 basis points in the auction held Wednesday.

The cut-off yield for the Government of Pakistan Market Treasury Bills (MTBs) is on the rise for the last one month. In the previous auction held on April 7, the rate for the T-bills rose by 60-80 bps.

The Monetary Policy Committee (MPC) of the State Bank increased the policy rate by 250 basis points in its emergency meeting held on April 7, 2022. Accordingly, the cut-off yield on all short-term government papers is gradually increasing.

The State Bank of Pakistan (SBP) conducted the auction for the sale of 3-month, 6-month and 12-month MTBs on April 20, 2022 and received bids amounting to Rs 914 billion with a realized value of Rs 854 billion.

The received bids include Rs 406.4 billion for 3-month, Rs 248.44 billion for 6-month and Rs 259.11 billion for 12-month. The federal government accepted bids amounting to Rs 568.28 billion or Rs 535.896 billion realized value. In addition, non-competitive bids worth Rs 45.48 billion were accepted. Total acceptance was Rs 614 billion against the target of Rs 600 billion set for this auction.

The cut-off yield of all T-bills went up ranging between 55 bps to 70 bps in the auction held on Wednesday. The cut-off yield of 3-month short term government securities rose by 70 bps to 13.50 percent from 12.8 percent in the previous auction held on April 6, 2022. The borrowed amount through 3-month T-bills was Rs 291 billion.

Bids worth Rs 166.29 billion were accepted for the 6-month MTBs at a cut-off yield of 13.85 percent, up by 60 bps. In addition, the cut-off yield of 12-month T-bills increased 55 bps to 13.85 percent compared to 30.30 percent in the previous and some Rs 111 billion were borrowed.

In addition, the federal government also raised some Rs 37.814 billion through sale of 2-year and 3-year Pakistan Investment Bonds Floating Rate out of received bids amounting Rs 100.7 billion on Wednesday. This includes Rs 21.465 billion of 2-year bonds and Rs 16.348 billion of 3-year PIBs.

Copyright Business Recorder, 2022

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