The cut-off yield on short-term government papers declined slightly in the auction held Wednesday. The State Bank of Pakistan (SBP) conducted the auction for Market Treasury Bills (MTBs) on January 6, 2016 for the sale of 3-month, 6-month and 12-month bills and accordingly received bids amounting to Rs 536.173 billion with realised value of Rs 515.180 billion.
Most of the bids were received for 12-month period as banks and other financial institutions are expecting further decline in key policy rate in upcoming monetary policy to be announced this month. The received bids included Rs 119.33 billion for 3-month, Rs 191.3 billion for 6-month and Rs 225.54 billion for 12-month. The federal government accepted bids amounting to Rs 242.96 billion (Rs 235.216 billion realized value). The borrowed amount is almost equal to the target of Rs 250 billion set for this auction. However, the cut-off yields of all MTBs have slightly been declined in the wake of expected cut in the interest rate.
The cut-off yield of 3-month MTBs was set at 6.3038 percent, down by 3 basis points (bps) with accepted bids amounting to Rs 71.384 billion (realized amount). For the 6-month, bids worth Rs 113.446 billion were accepted at a cut-off yield of 6.3092 percent down from 6.3637 percent. Similarly, the cut-off yield of 12-month T-bills was fixed at 6.3098 percent, down by 8 bps while some Rs 50.385 billion were borrowed.