Cut-off Yield on T-Bills Drops by 14 BPS

The cut-off yields on the auction of market treasury bills (T-Bills) dropped by 14 basis points despite an increase in the interest rate. The government raised Rs. 730 billion from the auction according to data released by the State Bank of Pakistan (SBP) on Wednesday. Interestingly, the government received the highest bids for three-month T-Bills. For the three-month papers, the government raised Rs. 535 billion after receiving aggregate bids worth Rs. 1,166 billion. This paper’s cut-off yield was lowered by 14 basis points to 10.45 percent. While the bidding pattern indicated that banks had more liquidity, the government remained sincere to its auction objective of Rs. 650 billion and raised Rs. 80 billion more than the intended amount despite bids totaling Rs. 1,942 billion. On the flip side, the cut-off yield for six-month T-Bills was also slashed by eight basis points to 11.37 percent, and the government raised Rs. 107 billion against Rs. 647 billion in bids. The amount raised for 12-month T-Bills was Rs. 20 billion compared to Rs. 128.5 billion in bids, and the cut-off yield was trimmed by two basis points to 11.49 percent. In extension, Pakistan Investment Bonds (PIBs) were auctioned and raised Rs. 51.75 billion for the government. The amount was raised in principle to fund three-year PIBs. The government raised most of the funds through T-Bills to fulfill the maturing amount due for this date. Note that the maturing amount is Rs. 682 billion.