KARACHI: The returns on short-term government papers rose to 21 percent in the auction held Wednesday, mainly due to recent changes in the key policy rate.
The SBP conducted the auction for the sale of 3-month, 6-month and 12-month Government of Pakistan Market Treasury Bills (MTBs) on March 8, 2023 and received bids amounting to Rs 2.44 trillion with a realised value of Rs 2.276 trillion.
The received bids included Rs1.92 trillion for 3-month, Rs238.27 billion for 6-month and Rs289.41 billion for 12-month.
The federal government overall accepted bids amounting to Rs 1.569 trillion including Rs 62.3 billion non-competitive bids against the target of Rs1.8 trillion set for this auction.
The cut-off yield of all T-bills went up ranging between 95 bps to 120 bps in the auction. The increase in the cut-off yield of short-term government papers has been witnessed after the further surge in interest rate by SBP.
The Monetary Policy Committee of the SBP has recently raised the key policy rate by 300 basis points to 20 percent on higher inflation. According to results, the cut-off yield of 3-month short term papers rose by 105 bps to 20.9996 percent and Rs 1.505 trillion were borrowed through the sale of 3-month T-bills.
Bids worth Rs 275.6 billion were accepted for the 6-month MTBs at a cut-off yield of 20.8498, up by 95 bps. Cut-off yields of 12-month T-bills also mounted up by 120 bps to 20.9899 percent and Rs 2.024 billion were borrowed.
The SBP on Wednesday also conducted an auction for long-term Pakistan Investment Bonds (PIBs). In PIBs Floating Rate (PFL) Quarterly Auction, participation of Rs 308.826 billion was seen. This included Rs 306.876 billion for 2-year and Rs 1.95 billion in 3-year long-term bonds.
The federal government raised Rs 256.096 billion as against the target of Rs 70 billion including Rs256 billion against sale of 2-year bonds and Rs200 million of 3-year bonds. The cut-off yield for the MTBs has been increasing for the past few auctions. In the auction held on Feb 23, the cut-off yields of 3-month, 6-month and 12-month tenor was increased by 195 bps, 206 bps and 184 bps, respectively compared to previous auction as the market was expecting rate hike.
Copyright Business Recorder, 2023
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