SBP raises Rs792bn through auction for MTBs, cut-off yield soars up to 75 bps

The returns on short-term government papers further increased up to 75 basis points in the latest T-bills auction.

The cut-off yield for the Government of Pakistan Market Treasury Bills (MTBs) has been on a volatile ride for the past several weeks. In the previous auction held on May 18, the rate for the T-bills decreased by 5-29 bps.

However, the latest hike in T-bills rate comes after the Monetary Policy Committee (MPC) of the SBP increased the policy rate by 150 basis points, taking it to 13.75% in its meeting held on May 23, 2022, the highest interest-rate level since 2011 when it stood at 14%.

Accordingly, the cut-off yield on all short-term government papers is gradually increasing.

The SBP conducted the auction for the sale of 3-month, 6-month and 12-month MTBs on June 01, 2022 and received bids amounting to Rs1,033 billion with a realised value of Rs968 billion.

Over Rs672bn raised through auction for MTBs, cut-off yield soars up to 129 bps

The received bids include Rs592.13 billion for 3-month, Rs214.23 billion for 6-month and Rs227.03 billion for 12-month.

The federal government accepted bids amounting to Rs757.19 billion. In addition, non-competitive bids worth Rs34.87 billion were accepted. Total acceptance was Rs792 billion against the target of Rs750 billion set for this auction.

The cut-off yield of all T-bills went up ranging between 55 bps to 75 bps in the auction held on Wednesday. The cut-off yield of 3-month short term government securities rose by 75 bps to 15.25% from 14.5% in the previous auction held on May 18, 2022. The borrowed amount through 3-month T-bills was Rs551 billion.

Bids worth Rs91.23 billion were accepted for the 6-month MTBs at a cut-off yield of 15.25%, up by 55 bps. In addition, the cut-off yield of 12-month T-bills increased 75 bps to 15.5% compared to 14.75% in the previous auction and some Rs115 billion were borrowed.