Govt raises Rs506bn from sale of MTBs
- Margin on all MTBs also rose by 52 bps to 100 bps
KARACHI: The federal government on Wednesday raised some Rs 506 billion against sale of short-term security paper. The State Bank of Pakistan (SBP) conducted an auction for sale of 3-month, 6-month and 12-month Government of Pakistan Market Treasury Bills (MTBs) through primary dealers on Wednesday (July 13) with settlement date on July 14, 2022.
This was the first auction after the monetary policy announced on July 7, in which the monetary policy committee of the SBP increased the policy rate by 125 basis points to 15 percent. Accordingly, margin on all MTBs also rose by 52 bps to 100 bps in the auction held on Wednesday.
Overall, bids of Rs 1.574 trillion were received for all three papers. Most bids were submitted for the 3-month MTBs as the market is anticipating further monetary tightening in future, if inflationary pressure on the economy persists.
Bids worth Rs 1.26 trillion were received for 3-month MTBs, Rs 247 billion for 6-month MTBs and Rs 200 billion for 12-month MTBs. Out of total bids, the federal government borrowed Rs 506 billion through sale of short-term government papers against a target of Rs 500 billion for this auction.
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An amount of Rs 356.328 billion was borrowed against sale of 3-month MTBs and its cut-off yield surged by 52 bps to 15.75 percent. Cut-off yields of 6-month MTBs also increased by 100bps to 15.80 percent with accepted bids of Rs 38.463 billion.
The cut-off yield of 12-month MTBs rose by 99 bps to 15.94 percent and an amount of Rs 71.015 billion was borrowed. In addition, bids worth Rs 37.317 billion were accepted from non-competitive bids.
The auction for the sale of 2-year and 3-year Pakistan Investment Bond (PIBs) - Floating Rate (PFL) Quarterly was held on Wednesday. Overall bids amounted to Rs 311.84 billion were received and the SBP accepted bids worth Rs 173.340 billion and Rs 1.25 billion of non-competitive bids.
The money market also witnessed some surge in the Karachi Interbank Offer Rate (KIBOR) and the 6M KIBOR increased by 35 bps DoD and reached an all-time high level of 15.87 percent.
Copyright Business Recorder, 2022
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