Auction for MTBs: Rs1.74trn mopped up to finance fiscal deficit

KARACHI: The federal government Wednesday borrowed Rs 1.74 trillion from domestic banking system to finance the rising fiscal deficit.

The State Bank of Pakistan (SBP) on June 29, on behalf of federal government, conducted the auction for the sale of 3-, 6- and 12-month Government of Pakistan Market Treasury Bills (MTBs).

Overall, the SBP received bids of Rs 2.37 trillion for the sale of all three tenors’ government security papers.

Out of the received bids, the SBP raised Rs 1.742 trillion against the target of Rs 800 billion for this auction.

The shortest 3-month MTBs fetched highest Rs 1.9 trillion worth bids, out of which, the federal government borrowed Rs 1.7 trillion. The cut-off yield decreased by 2 basis points (bps) to 15.23 percent.

Some Rs 15 million were raised through the sale of 6-month tenor and its cut-off yield also declined by 15 bps to 14.80 percent.

The government borrowed some Rs 4.5 billion against the sale of 12-month and its cut-off yield remained unchanged to 14.95 percent.

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

In addition, some Rs 27 billion were raised against the non-competitive bids of MTBs. Industry sources said that as the banks are expecting some surge in the key policy rate in the upcoming monetary policy, therefore they largely participated in the 3-month T-bills.

Copyright Business Recorder, 2022